Seafood restaurant chain Red Lobster is mulling a Chapter 11 bankruptcy filing as it looks to restructure its debt, according to people with knowledge of the matter.
Red Lobster has been getting advice from law firm King & Spalding, said the people, who asked not to be identified discussing a private matter. The dining chain is considering a possible Chapter 11 filing to shed some long-term contracts and renegotiate a swath of leases, the people said. Red Lobster’s cash flows have been weighed down by onerous leases and labor costs, among other issues. Restructuring discussions are ongoing and a final decision hasn’t been made, they said.
The company introduced its popular cheese-flavored biscuits in 1992, and Red Lobster now boasts hundreds of locations across the U.S. and Canada, along with international franchises. The restaurant chain has gone through multiple owners and management changes in recent years.
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