A massive restaurant now plans new way out of bankruptcy with its creditors aligning behind a debt-for-equity deal that limits disruptions.
The casual-dining seafood chain Red Lobster and its creditors are aligning behind a debt-for-equity deal, enabling it to continue operating without the disruptions involved with a sale of its assets.
This includes the need to transfer hundreds of liquor licenses to a new company.
Brad Sandler, a bankruptcy attorney who is representing the unsecured creditors’ committee in the case, has said that the process can take months, and Red Lobster restaurants would be unable to sell alcohol during that time.
This in turn would still lead to some loss within the company’s profits.
These transitional costs across the 550 locations can climb into millions of dollars.
“If they do a reorganization, because of all the regulatory issues that you won’t have to deal with, I think there’s substantially less disruption, and disruption is always expensive,” Sandler said.
This final decision will depend on who purchases the Orlando-based restaurant that had filed for a Chapter 11 bankruptcy this past May with up to $300 million in debt.
This price for the chain has been set by stalking-horse bidder Fortress Investment Group, with other parties having until July 18 to make an offer.
Red Lobster had blamed inflation, leases, as well as poor management for its struggles and its financial failing.
The restaurant had closed over 100 locations days before the Chapter 11 bankruptcy filing and is expected to close more if it is unable to renegotiate its current leases.
“We’re all working to not only maximize value but to ensure that Red Lobster continues as a well-capitalized, successful go-forward business with the maximum footprint,” Sandler said.
This process is still ongoing, and it will be up to the buyer to see it through, reports Restaurant Business.
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Also Read: Another Mall Clothing Retailer Now At High Risk of Bankruptcy
Other Economy News Today
A massive rental company with 34k locations now shuts down its operations after filing for bankruptcy and 22 years in business.
Users of movie rental company Redbox were left saddened after it was announced that it would be shutting down operations.
The announcement comes after the rental company’s parent company, Chicken Soup for the Soul Entertainment, filed for Chapter 11 bankruptcy.
According to court documents obtained by the Washington Post, the Connecticut-based company claimed to be one billion dollars in debt.
As a result, Redbox, which was a staple of many grocery stores including Walgreens, and CVS will be shuttered.
Many fans took to social media to express how upset they were with the loss.
“I knew it was coming, sadly,” UltraVada wrote in a post on X, formerly Twitter.
“It was inevitable,” a second person mourned.
“I knew this would happen when I heard they filed for Bankruptcy but its still sad to hear. I have a lot of fun memories of Redbox,” a third person lamented.
“I still don’t think this will be or ever be the end of physical media as we do still get remasters of some movies in 4k/Bluray.”
One person revealed that they had forgotten the rental service had existed.
Some users were not surprised by the announcement.
“Not surprised since nobody really rents videos anymore with the rise of streaming and what not,” one user admitted.
“Also kinda remember getting into a feud with them on here.”
One user also pointed out that the last remaining Blockbuster, located in Bend, Oregon, managed to outlive Redbox.
Redbox was acquired by Chicken Soup for the Soul Entertainment (CSSE) in 2022 and became one of the company’s flagship video-on-demand streaming services.
At its peak, CSSE operated more than 20,000 DVD rental kiosks across the country.
The company’s filing means that the company’s more than 1,000 employees will be laid off, per The Wall Street Journal.
It was also reported by Deadline that many employees at CSSE hadn’t received their paychecks and had medical benefits cut in late June.
Also Read: This Massive Mall Retailer Is Now Closing In California
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