Red Lobster has filed for Chapter 11 bankruptcy.
The struggling seafood chain, late Sunday, announced the filing as well as plans to sell its business to an entity that is controlled by its existing lenders. Restaurants will remain open and continue normal operations, though more than 50 locations were shut down last week.
“This restructuring is the best path forward for Red Lobster,” said CEO Jonathan Tibus in a statement. “It allows us to address several financial and operational challenges and emerge stronger and refocused on our growth. The support we’ve received from our lenders and vendors will help ensure that we can complete the sale process quickly and efficiently while remaining focused on our employees and guests.”
The company said it has received a commitment of $100 million in financing from existing lenders to ensure operations continue.
Red Lobster has seen a series of troubles in the past year, from reduced traffic as diners pulled back from rising prices at restaurants to poor business decisions. Last year, Red Lobster saw a big loss in its third-quarter earnings after it expanded its Endless Shrimp promotion to an everyday event, rather than its traditional Mondays-only offering. Prices were higher, but so many people took advantage of the deal—and some to a gluttonous extreme—that earnings tumbled.
Last week, the company abruptly closed nearly 50 restaurants, 7% of its national footprint, putting up all of the contents for rapid auction. Locations across 21 states were impacted by the shutdowns. The company still has over 600 locations nationwide.
Red Lobster’s bankruptcy was widely expected given the closures. It’s one of several chains that have either looked for a buyer or declared bankruptcy in the last few months. Others include Tex-Mex franchise Tijuana Flats and Florida’s Brocato’s Sandwich Shop.