Red Lobster: RSA-Backed Chapter 11 Confirms with GUC Trust and New Equity

Red Lobster Management LLC, the longtime casual-dining seafood chain, filed chapter 11 petitions in the Middle District of Florida on May 19, 2024 while keeping restaurants open. The filing came after several years of traffic pressure and a rapidly tightening liquidity profile that management linked to a combination of underperforming locations, a difficult consumer environment, and competitive dynamics in value-focused dining.

The case became a closely watched restaurant restructuring because it paired a lender-driven transaction (with a buyer identified near the beginning of the case) with an unusually public operating narrative that included the decision to make a $20 “Ultimate Endless Shrimp” promotion permanent. The company entered chapter 11 with a court-supervised sale process in motion and then implemented a confirmed plan with a going-concern outcome and a litigation-centered path for general unsecured recoveries.

Debtor(s)	Red Lobster Management LLC (15 jointly administered debtors)
Court	U.S. Bankruptcy Court, Middle District of Florida (Orlando Division)
Judge	Hon. Grace E. Robson
Case Number	6:24-bk-02486-GER (lead case)
Petition Date	May 19, 2024
Confirmation Date	September 5, 2024
Effective Date	September 16, 2024
Restructuring Path	Sale process and RSA-backed chapter 11 plan; transaction implemented through a plan-based “reorganized equity sale” structure in court filings
DIP Facility	Up to $275 million (including $100 million new money and $175 million roll-up term loans)
Prepetition Funded Debt (court filings)	~$294 million term loan and ABL facilities (petition-date funded debt framework)
Employees	~36,000 (reported)
Footprint	~551 U.S. locations and 27 in Canada at filing (reported), plus franchised locations outside North America
Final Decree	December 2024 (cases closed other than the RLSV, Inc. wind-down case)

RSA-Backed Sale Process and Plan Confirmation

Business profile and why this filing mattered to the restructuring market. Red Lobster’s operating footprint and lease exposure made it a systemically relevant casual-dining case for landlords, suppliers, and trade creditors. The chain traces its origin to a first restaurant that opened in Lakeland, Florida in 1968 and grew into what management characterized in bankruptcy filings as the largest North American seafood restaurant chain. Red Lobster employed about 36,000 workers and operated hundreds of locations across the United States and Canada at filing, with the footprint described as 544 locations across 44 U.S. states and four Canadian provinces around confirmation. Red Lobster also maintained a franchised presence outside North America, including in Mexico, Ecuador, Japan, and Thailand, as noted in press coverage and company background summaries.

Ownership history mattered in this case because the chapter 11 narrative included a dispute around Thai Union, a Bangkok-based seafood company that had acquired an equity stake in Red Lobster and later became its majority owner. Thai Union was described as Red Lobster’s largest investor in 2020 and later publicly disputed allegations related to shrimp purchasing and the “endless shrimp” strategy in a Bloomberg article. Background sources also tracked the chain’s ownership transitions, including the 2014 sale from Darden Restaurants to Golden Gate Capital and Thai Union’s prior stake purchase.

The quantified operating decline that preceded the chapter 11 filing. Red Lobster’s bankruptcy filings and news coverage emphasized a multiyear traffic and profitability decline, with a near-term liquidity cliff. The company’s fiscal 2023 results included a reported $76 million net loss, guest count had fallen by about 30% since 2019, and cash was described as dropping from about $100 million to under $30 million within roughly six months. Management linked the distress to a difficult macroeconomic environment, an underperforming footprint, failed strategic initiatives, and increased competition, framing the case as both an operational and capital structure problem. Bankruptcy filings described interest expense, lease obligations, and working-capital mechanics as compounding the liquidity pressure, which is consistent with a restaurant model where lease-fixed costs and labor costs can quickly overwhelm margins when traffic weakens.

The public-facing story also included pre-filing footprint actions. Red Lobster shuttered approximately 80 locations in the week before filing, and the case progressed with additional store closures. A restructuring that begins with a rapid store-closure program tends to have a cascading effect on vendors, landlords, and gift card holders: closures concentrate lease rejection claims and trade claims, while a continuing go-forward footprint still needs uninterrupted supply chain, payroll continuity, and customer confidence.

Liquidity mechanics and failed out-of-court alternatives. Court filings described an effort to pursue an out-of-court restructuring supported by term loan lenders and Thai Union that ultimately did not close, with lenders reportedly unwilling to provide incremental liquidity without additional support. Filings described the cash balance falling from approximately $100 million in May 2023 to less than $30 million within roughly six months, driven by operating cash losses, interest payments, and a borrowing-base-driven paydown tied to a vendor-managed inventory transition. The bankruptcy narrative also described significant lease obligations (including a subset tied to underperforming stores), which is a familiar precursor to restaurant chapter 11 filings: a lease-heavy footprint becomes increasingly difficult to carry when traffic declines and commodity and labor costs rise.

“Ultimate Endless Shrimp” as an operating and governance flashpoint. The decision to make “Ultimate Endless Shrimp” a permanent menu item became a case-defining narrative because it was both quantifiable (reported direct cost) and legible to non-specialist readers (a single promotion tied to negative economics). Red Lobster made the $20 promotion permanent, and the change was associated with a reported $11 million cost impact. The move was described as being made despite pushback from members of management, and it later became a post-emergence operating talking point when the new CEO said the promotion caused “a lot of chaos” in a Fox Business interview.

The “endless shrimp” issue also intersected with an ownership and procurement narrative. Bankruptcy filings were described as investigating Thai Union’s alleged “undue influence” in shrimp purchasing decisions, while Thai Union later disputed allegations around the shrimp deal in a Bloomberg article. From a restructuring perspective, the more durable point is that the bankruptcy process preserved litigation claims and created a trust structure where recoveries for certain stakeholders could be tied to the outcome of post-confirmation claims.

Capital structure at filing: why the path predictably favored secured creditor control. Court filings described a comparatively simple funded-debt stack for a restaurant chain of Red Lobster’s size: a secured term loan and an ABL facility. The company described roughly $294 million of funded debt, consistent with industry reporting that the chain entered bankruptcy with about $294 million of debt. In bankruptcy filings, the secured term loan was described as having approximately $264.7 million outstanding at the petition date, and the ABL facility was described as having a $100 million commitment with letters of credit outstanding. The capital structure mechanics mattered because they aligned control with secured lenders: a roll-up DIP and credit-bid-centric value path can be difficult for other constituencies to disrupt absent a competing financing source or competing purchase proposal.

Footprint rationalization and leases: the operational workstream behind the headlines. Bankruptcy filings described lease obligations that were large in absolute dollars and concentrated in underperforming stores, and the case proceeded with a significant store-closure program. The closure program included approximately 100 units closed in May 2024 and an additional 23 unprofitable stores planned to close by August 2024, alongside a continuing footprint that remained measured in the hundreds of restaurants. In restaurant restructurings, this is where economics and legal process meet: every closed location potentially creates (i) lease rejection damages, (ii) fixture and personal property disposition issues, (iii) vendor and trade claim disputes, and (iv) workforce transitions. It also becomes a major driver of claims volume and claim reconciliation work for a claims agent and for the plan administrator after emergence.

Facility	Petition-date structure (court filings)
Term loan facility	~$264.7 million outstanding; secured by substantially all assets; administrative agent identified in filings as Fortress Credit Corp.
ABL facility	$100 million commitment (including a letter of credit sublimit); no loans outstanding at filing; letters of credit and card obligations outstanding
Intercreditor dynamics	ABL lender described as having senior liens on certain current assets (cash, inventory, credit card receivables), with term loan parties described as holding senior liens on other collateral

DIP financing: the structure and why the roll-up feature mattered. The company’s press release announcing the filing described $100 million of DIP financing from existing lenders as a headline liquidity backstop while the company pursued a sale and restructuring process. Bankruptcy filings described a larger postpetition financing package with a roll-up feature that converted prepetition secured obligations into superpriority DIP obligations. In a secured-creditor-driven case, roll-up mechanics can be decisive: they tighten the linkage between the DIP and the secured creditor group that controls the ultimate transaction and reduce the feasibility of later priming alternatives.

Court filings described a DIP package with (i) new money and (ii) rolled-up term loans, with interest pricing tied to a reference rate or SOFR plus a spread, a short maturity pegged to key milestones, and budget variance covenants. Adequate protection packages in restaurant cases typically include replacement liens and superpriority claims, with carve-outs for professional fees; this case followed that pattern in filings. The practical effect is that the debtor can maintain operations and pay critical expenses in a controlled runway while the restructuring terms are implemented, but the runway is conditional on milestone and budget compliance.

The DIP filings also reflected how quickly the case was intended to move. The maturity mechanics were tied to a sale of substantially all assets or the plan effective date, and the operating budget included variance tests that tightened after the first two test periods. Court filings described adequate protection including replacement liens, superpriority claims, and other protections for prepetition secured parties, as well as credit-bid rights. For trade creditors, the practical implication is that a roll-up DIP plus credit-bid economics tends to put most enterprise value “under” the secured layer, leaving general unsecured recoveries dependent on residual value and, in this case, litigation proceeds preserved in a trust structure.

Term	Summary (court filings)
Total DIP facility	Up to $275.0 million (including $100.0 million new money and $175.0 million roll-up)
Interim availability (new money)	Up to $40.0 million, increasing after entry of the final order
Pricing	Reference rate + 9.50% or adjusted term SOFR + 10.50% (as described in filings)
Maturity	Earliest of a fixed outside date, plan effective date, or closing of a sale of substantially all assets (as described in filings)
Covenants	Weekly budget with permitted variance thresholds (as described in filings)
Adequate protection	Replacement liens, superpriority claims, and related protections (as described in filings)

Sale process architecture: stalking horse, failed auction, and a plan-based transaction. Red Lobster entered chapter 11 with a stalking horse transaction announced and a court-supervised sale process designed to preserve going-concern value while reducing the footprint. The company’s filing-day press release said it had entered into a stalking horse purchase agreement to sell substantially all assets to an entity controlled by existing term lenders. The company later canceled a scheduled July 2024 auction after receiving no bids by the deadline other than the stalking horse bidder, and that same reporting characterized the proposed purchase price as $376 million structured with debt and DIP financing components. Fortress Investment Group was positioned to acquire Red Lobster, and reporting highlighted Fortress’s broader restaurant portfolio through its ownership of SPB Hospitality.

Court filings reflect that the sale path was implemented through a plan framework rather than a standalone sale order narrative in public reporting. Bankruptcy filings described proceeding through a plan-based “reorganized equity sale” structure. That distinction matters for stakeholders because the transaction mechanics influence (i) how liabilities are treated (assumed vs left behind), (ii) what claims are channeled into a trust, and (iii) which releases and injunctions bind creditors. The confirmed plan and confirmation order referenced a sale transaction negotiated among the debtors, the term loan parties, and the unsecured creditors’ committee to sell business operations as a going concern and distribute proceeds in accordance with the plan, with assets vesting at the plan effective date.

Court filings also disclosed a structured sale calendar early in the case: a bid deadline, a conditional auction date, and a sale hearing schedule, with objection deadlines and adequate assurance information requirements for assumption-and-assignment counterparties. Those procedural mechanics are central in a multi-hundred-store restaurant case because they determine (i) how quickly landlords and counterparties must respond, (ii) whether there is a realistic window for competing proposals, and (iii) how cure disputes and assumption lists are resolved before a closing.

Process step	Schedule described in court filings
Bid deadline	July 18, 2024
Auction (if needed)	July 23, 2024
Sale hearing (originally scheduled)	July 29, 2024
Sale hearing (continued date)	September 5, 2024

Plan structure: who received value and why general unsecured recoveries were tied to litigation. The confirmed plan framework described treatment across multiple classes, including full payment of priority claims in cash, a secured lender class receiving the primary value allocation, and general unsecured creditors receiving distributions through a trust. The disclosure statement described the creation of a GUC trust to receive a “GUC Fund” and a defined set of “Equityholder Litigation Claims,” and it described projected recoveries for general unsecured creditors as “currently unknown and tied to litigation recoveries” in the contemplated sale structures. Public reporting focused on the “endless shrimp” strategy and related procurement questions, but the plan architecture preserved litigation claims as a recovery source for certain stakeholders.

The plan also implemented a transaction in which assets (including “Purchased Assets,” in the terminology used in court documents) vested in the purchaser or its designee, a reorganized debtor, or the GUC trust as applicable on the plan effective date. The confirmation order referenced an amended and restated purchase agreement dated August 22, 2024 identifying RL Investor Holdings LLC as purchaser in plan supplement materials. The post-confirmation ownership transition was described publicly as a Fortress-led buyer group with co-investors TCW Private Credit and Blue Torch, and the same reporting described a $60 million new funding commitment in connection with the approved transaction. In transaction terms, this is the typical “newco” outcome for a secured-creditor-driven restaurant restructuring: the operating business continues under new ownership with new liquidity support, while general unsecured value is separated into a trust vehicle and long-tail claims are administered post-effective date.

The litigation component was explicit in public reporting as well. A Restaurant Dive description of the confirmed transaction stated that the plan included a litigation trust targeting former equity holders and executives, which aligns with the trust-centric recovery structure described in court documents. That structure allowed the chapter 11 case to move to confirmation and an effective date on a fixed timetable while pushing remaining disputes into a post-confirmation framework.

Governance reset and post-emergence operating posture. The confirmed transaction was described as including a new CEO, Damola Adamolekun, and an ownership group led by Fortress Investment Group with TCW Private Credit and Blue Torch as co-investors. Coverage also highlighted Fortress’s existing ownership of SPB Hospitality, which owns multiple restaurant brands. In a restaurant turnaround, that type of sponsor platform matters because it can centralize procurement, real estate strategy, and brand portfolio decisions, and it can provide access to experienced operators and shared services that are difficult to fund while a company is constrained by a high-leverage, high-cash-interest capital structure.

Class (high level)	Treatment summary (court filings)
Secured claims (misc.)	Generally agreed treatment or court-ordered resolution
Priority claims	Paid in full in cash
Term loan claims	Restructuring support agreement-driven treatment, generally through issuance of new equity and related plan-based transaction mechanics
General unsecured claims	Distributions through a general unsecured creditor trust, with recoveries tied to available trust assets and litigation recoveries
Intercompany claims	Reinstated/assumed or treated under plan supplement mechanisms
Equity interests	Cancelled

Executory contracts, leases, and cure/rejection claims: the operational heart of a restaurant restructuring. Lease overhang and contract rationalization are typically the largest operational workstreams in restaurant chapter 11 cases. Red Lobster’s filings described significant lease obligations and a substantial number of underperforming stores, which aligns with the pre-filing closure wave reported in the Orlando Sentinel and other coverage. While the case’s public narrative centered on promotions and ownership dynamics, the restructuring mechanics also involved the classic restaurant toolkit: targeted closures, lease rejections, cure negotiations, and assumption-and-assignment processes designed to preserve profitable locations and shed negative unit economics.

Court filings also show how effectiveness triggered administrative and rejection-related deadlines. The notice of effective date stated that rejection damages claims for executory contracts and unexpired leases were due within 30 days after the later of entry of an order approving rejection (including confirmation), the effective date of rejection, or the plan effective date. That deadline structure is typical in sale-and-plan cases: it provides counterparties a defined window to quantify rejection damages and channels those claims into the post-confirmation administration process. Administrative expense claims (subject to exclusions) were also due within 30 days after the plan effective date, a bar date that can be material for vendors, landlords, and counterparties asserting postpetition claims.

Deadline (court filings)	Trigger mechanics
Administrative expense claim deadline	30 days after the plan effective date (subject to exclusions)
Rejection damages claims (executory contracts / unexpired leases)	30 days after the later of (i) entry of an order approving rejection (including confirmation), (ii) effective date of rejection, or (iii) the plan effective date

Claims agent and noticing mechanics: why this matters for creditor administration at scale. In large chapter 11 cases with tens of thousands of employees, broad vendor bases, and large lease portfolios, claims administration is itself a major operational function. The court approved Epiq Corporate Restructuring, LLC as notice, claims, and solicitation agent effective as of the petition date. The retention order authorized Epiq to handle noticing, maintain the official claims register, receive proofs of claim as the court’s authorized repository, and establish a case website (among other administrative functions). In practice, a claims agent’s work determines how quickly bar date packages, solicitation materials, and plan notices reach counterparties and how efficiently claim objections and reconciliations can proceed during and after the case.

This was not a theoretical issue in Red Lobster. Court filings included a claims objection procedures order as a hub filing, which reflects the reality that in a restaurant case of this scale, claim objections and omnibus claim administration are a core post-confirmation workstream. The combination of (i) large lease and vendor populations and (ii) a trust-centric recovery path makes claims reconciliation and litigation administration a central “engine” of value distribution for general unsecured creditors.

Professional roles and fee signal: what the September 2024 fee orders show. Red Lobster’s restructuring used a common advisor set for large consumer restructurings: debtor co-counsel, an investment banker, and a financial advisor, along with committee counsel and a committee financial advisor. Court filings reflected retention of Berger Singerman LLP and King & Spalding LLP as co-counsel for the debtors, Hilco Corporate Finance as investment banker, and other specialized advisors including a real estate advisor and Canadian special counsel for cross-border aspects.

Fee orders entered shortly after confirmation provide a useful “snapshot” of the intensity of the case’s professional effort through confirmation. Court filings reflected awarded compensation of $6.0 million in fees and $0.18 million in expenses to Alvarez & Marsal North America, LLC as financial advisor for the debtors, as well as awarded compensation to King & Spalding, Pachulski Stang Ziehl & Jones (committee counsel), and Hilco Corporate Finance.

Professional firm (court orders)	Allowed fees + expenses
Alvarez & Marsal North America, LLC	$6,002,715.00 fees; $180,220.32 expenses
King & Spalding LLP	$7,770,225.00 fees; $38,005.25 expenses
Pachulski Stang Ziehl & Jones LLP	$1,177,413.50 fees; $9,623.72 expenses
Hilco Corporate Finance, LLC	$1,300,000.00 fees; $13,865.03 expenses

Effective date and case closure: what “completion” looked like in docket terms. The plan effective date occurred on September 16, 2024, as stated in a bankruptcy filing notice of effective date. The restructuring transaction was expected to close before the end of September 2024 in public reporting around confirmation, consistent with an effective date in mid-September and a go-forward ownership transition. The case then moved into a post-effective phase focused on claims administration, trust implementation, and resolving remaining contested matters.

In December 2024, the court entered a final decree closing the cases for the reorganized debtors while leaving the RLSV, Inc. case open as a remaining wind-down case. This is another common pattern in multi-debtor restaurant restructurings: the operating entities and key debtors close out once the plan has been substantially consummated, while a single debtor or a subset of entities remains open for longer-tail claim reconciliation, wind-down workstreams, and final distributions.

Date	Milestone
May 19, 2024	Chapter 11 filing announced while restaurants remained open
May 2024	Pre-filing and filing-period store closures reported in local and trade press
June 2024	Interim and final DIP orders entered; bidding procedures approved in court filings
July 2024	Auction canceled after no competing bids reported beyond the stalking horse bidder
September 5, 2024	Plan confirmation hearing; public reporting identified the buyer group and a new CEO
September 16, 2024	Plan effective date occurred (court filing notice)
December 2024	Final decree entered closing most cases while a wind-down case remained open

Frequently Asked Questions

When did Red Lobster file for chapter 11 bankruptcy?

Red Lobster filed chapter 11 petitions on May 19, 2024 in the Middle District of Florida, while stating that restaurants would remain open during the chapter 11 process.

Where was the Red Lobster bankruptcy filed?

The bankruptcy cases were filed in the U.S. Bankruptcy Court for the Middle District of Florida.

How large was Red Lobster at the time of filing (employees and locations)?

Red Lobster employed approximately 36,000 workers and reported operating hundreds of restaurants across the United States and Canada, with reporting around confirmation describing 544 locations across 44 U.S. states and four Canadian provinces.

What were the main drivers of Red Lobster’s distress?

Public reporting and bankruptcy filings pointed to a multiyear traffic decline and weakening profitability. Management cited a difficult macroeconomic environment, an underperforming footprint, and increased competition, while trade coverage cited a ~30% guest count decline since 2019 and a rapidly tightening cash position in the months before filing.

Did “Ultimate Endless Shrimp” play a material role in the filing?

The shift to a permanent “Ultimate Endless Shrimp” offering was associated with a reported $11 million cost impact. After emergence, the new CEO described the offering as creating “a lot of chaos” in a Fox Business interview.

What happened in the sale process and who acquired the company?

Red Lobster announced a stalking horse purchase agreement at filing and pursued a court-supervised sale process. The company later canceled a July 2024 auction after receiving no bids by the deadline other than the stalking horse bidder. The confirmed transaction was described publicly as a buyer group led by Fortress Investment Group, with co-investors TCW Private Credit and Blue Torch.

When was the restructuring plan approved and who became CEO after confirmation?

The restructuring plan was approved on September 5, 2024, and Damola Adamolekun became CEO as part of the post-confirmation transition described in public reporting.

Who is the claims agent for Red Lobster?

Epiq Corporate Restructuring, LLC serves as the notice, claims, and solicitation agent. The firm maintains the official claims register and administers creditor noticing and solicitation activities in the case.

For more chapter 11 case research and restructuring analysis, visit the ElevenFlo bankruptcy blog.