More Red Lobster Locations Set To Close During Bankruptcy Case

Red Lobster has long been an American family favorite when it comes to celebrating special occasions like birthdays, anniversaries, and promotions with a seafood dinner. Whether you like crab legs, shrimp, salmon, or the synonymous lobster, Red Lobster has a history of meeting diners’ needs and setting standards in the restaurant industry. But formally loyal customers started to dwindle as the cost of living soared to record-breaking levels. Upper management experimented with strategies to draw them back in, such as a famously disastrous all-you-can-eat shrimp deal that proved to be costly for Red Lobster. Red Lobster even saw support from superstar hype man, reality leading man, and women’s sports philanthropist Flavor Flav, but this was not enough to keep Red Lobster from going bankrupt. 

Red Lobster filed its chapter 11 bankruptcy petition in May 2024, closing 99 restaurant locations in 28 states. While Red Lobster’s menu prices vary by location, there are expectations at how much a meal will cost at the chain, and Red Lobster simply can’t afford to charge what it costs to keep certain locations open due to rent increases. When these locations closed, their kitchen equipment and other assets were sold by auction. In addition to these 99 closed locations, Red Lobster entered its bankruptcy with plans to keep another hundred locations open, but through cooperation and concessions from their landlords. But Red Lobster’s landlords and other creditors weren’t eager to enter into rent forgiveness agreements with the seafood chain. Several of Red Lobster’s lenders joined to form RL Purchaser LLC and purchase Red Lobster for $376 million. This acquisition is still under review with the bankruptcy court. While that decision is pending, Red Lobster also submitted documents that would allow it to abandon 23 of its restaurant location leases. The court is supposed to make a decision by the end of August so that Red Lobster can avoid incurring another month’s worth of rent at store that will inevitably close. 

Red Lobster filed chapter 11 bankruptcy, which is a complex form of bankruptcy that is most often utilized by businesses that aren’t quite ready to throw in the towel. Most individuals will use chapter 7 or chapter 13 bankruptcy instead, which both have more straightforward procedures and expectations. Both can clear debt in a life-changing way, but serve different purposes based on the debtor’s needs and financial situation. Do you need assistance determining which form of bankruptcy is best for you? Discuss your situation in-depth with a skilled Tucson bankruptcy professional today- call 520-307-0020 to schedule your free consultation. 

Will The Latest Store Closures Affect Tucson?

Red Lobster has locations far and wide, including right here in Tucson. Tucson has three Red Lobster locations: at 5061 North Oracle Road, 5315 South Calle Santa Cruz, and 5870 East Broadway Road. None of these locations are expected to shut down due to Red Lobster’s bankruptcy filing. However, Arizona’s Yuma location, at 1521 South Yuma Palms Parkway, is expected to close due to Red Lobster being acquired by RL Purchaser, LLC. While Tucson’s Red Lobster employees won’t be affected by these bankruptcy changes, anyone who works at the Yuma location or was seeking a job there will need to find employment elsewhere. Has job loss or prolonged unemployment caused you to accrue debts that you won’t be able to pay back without some help? Do you ignore calls from unknown numbers because you are avoiding communication with your creditors? Are you facing an imminent creditor collection effort, like a lawsuit, wage garnishment, or repossession? Bankruptcy could be the solution to your financial issues that will clear your debts and get you back on the right track. It is most effective when filed with guidance and counsel from a skilled bankruptcy attorney. Whenever you’re ready to get started with your free consultation, reach out to our firm by calling 520-307-0020. 

Corporate Bankruptcy- Remaining In Business Or Shutting Down

There is an assumption that an entity that declares bankruptcy loses the right to earn an income. But only a business that files for chapter 7 bankruptcy is required to shut down its operations for good. An individual who files for chapter 7 bankruptcy can keep working and earning a living, although some post-bankruptcy payments might be intercepted by the trustee to pay debts. An individual who files for chapter 13 bankruptcy will need to continue working and earning an income to achieve a successful case discharge. And a business (or individual) that files for chapter 11 bankruptcy has the opportunity to stay in business and try to come out of the case with a plan to turn a profit. 

Closing locations and shutting down operations can be part of a chapter 11 bankruptcy game plan, as the filing can protect assets and other interests as the case is pending. But because chapter 7 requires a business to shut down, and chapter 13 bankruptcy is largely unavailable to business owners, one of chapter 11 bankruptcy’s defining features is the opportunity to stay open. Another defining feature is the creditor committee. This is a panel of the bankruptcy debtor’s top creditors. This panel votes for approval on major business and bankruptcy issues. As one might expect, the formation of a panel of creditors can make a bankruptcy case take longer, which increases legal costs. Small businesses looking to expedite the process can apply to use a small business filing provision. A small business filing is available to companies with $3,024,725 or less in debts. A small business can also use a subchapter V filing if they have $7,500,000 or less in debt. Businesses that qualify for these provisions don’t need a creditor committee to form unless there has been a showing of cause, which can make the process faster and simpler, which translates to lower legal costs. 

Chapter 11 bankruptcy can be an attractive option for small business owners looking to shed debt, but it can also be complex and expensive compared to the potential debtor’s other options. When a business with relatively low-value assets files for bankruptcy, the business owner can open up a new company with a similar name. This allows small business owners a bankruptcy option besides a small business or subchapter V chapter 11 filing. For more information about declaring chapter 7 bankruptcy as a small business owner in Tucson, call 520-307-0020 for your free consultation with our firm. 

Simplify The Bankruptcy Process With Our Skilled Tucson Bankruptcy Lawyers

Bankruptcy can be a tedious process with damaging results if filed incorrectly. However, it doesn’t have to be if you file your case with the appropriate legal representation. Our Tucson bankruptcy team knows just what is required to take our clients’ cases from start to finish. We take care of the most difficult parts of bankruptcy so you don’t lose focus on your top priorities. Knowing that you have an experienced lawyer at the helm can make any issues that arise throughout your case less stressful. To solve the problem of our clients not having funds available to retain bankruptcy counsel, we offer payment options for eligible clients starting at Zero Dollars Down. To see if you qualify, and for more information about the bankruptcy process in general, contact us to get a free consultation at 520-307-0020.