After the COVID-19 pandemic, many companies were strongly affected due to a lack of clients, which led to waste and loss of products, especially in restaurants. Though many were able to recover, others were still showing hardship and such is the case with Red Lobster.

After announcing closure of branches, Red Lobster declares bankruptcy

These last few years, this famous seafood restaurant chain has been struggling against labor and rent costs as well as promotions such as their famous "endless shrimp" deal which ended up being counterproductive as it supposedly caused millionaire losses due to how popular it was.

It was due to this that the company decided to close around 48 branches in the United States (including some in California) and on Sunday, May 19, they declared bankruptcy and filed for relief under Chapter 11 of the Bankruptcy Code, as they had debts between $1 and $10 billion dollars.

This bankruptcy filing was signed by the company's CEO, Jonathan Tibus, a specialist in business restructuring who was put in charge of Red Lobster in March.

The chain had changed owners throughout its 56-year-old history. For example in 2024, Thai Union Group, one of the biggest providers of seafood in the world and co-owners of Red Lobster, announced that they would sell its stakes. CEO Thiraphong Chansiri claimed that issues like the pandemic, higher interest rates, and rising material and labor costs have created "negative financial contributions" to Thai Union and its shareholders, creating losses valued at around $19 million dollars.

It should be noted that filing for bankruptcy under Chapter 11 of the Bankruptcy Code allows companies to continue working by "pausing" their debt, while restructuring. When this process ends, creditors must be paid according to the guidelines agreed at the beginning.

RELATED VIDEO: McDonald's employee refuses to serve client