Red Lobster Files Bankruptcy
Red Lobster Files Chapter 11: A Bankruptcy Attorney and Law Professor’s Look Inside the Restructuring
After weeks of speculation fueled by the closing of multiple locations, seafood giant Red Lobster Management LLC officially filed for Chapter 11 bankruptcy. Initially closing about 50 locations, the final number of restaurants shuttered climbed to almost 100 across 28 states as the company prepared for reorganization.
By Alexander Hernandez, J.D., Professor, and Author of Consumer Bankruptcy Law (Routledge).
Updated on December 6, 2025.
The Professor’s Analysis: The Relevant Facts of Red Lobster’s Bankruptcy
The Red Lobster filing is a textbook example of how Chapter 11 is utilized for strategic corporate debt restructuring. To my students, I state that Chapter 11 bankruptcy is to keep the doors open while Chapter 7 is to close them permanently.
| Key Case Details | Information |
| Lead Debtor | Red Lobster Management LLC (and 14 affiliates) |
| Filing Date | May 19, 2024 |
| Jurisdiction | U.S. Bankruptcy Court, Middle District of Florida |
| Case Number | 6:24-bk-02486-GER (Jointly Administered) |
| Assigned Judge | Judge Grace E. Robson |
| Outcome | Plan confirmed on September 6, 2024; emerged from bankruptcy shortly thereafter under new ownership. |
United States Bankruptcy Court Middle District of Florida
The filing in the Middle District of Florida (Orlando Division) is my current district, but I practice in the northern part, which is Jacksonville, Florida.
What Chapter 11 Bankruptcy Actually Achieved
Chapter 11 is properly known as a Reorganization Bankruptcy, a mechanism that allows a business or high-net-worth individual to restructure their finances while continuing to operate.
- The Goal is Survival: The good news for Red Lobster is that Chapter 11 was filed, which means the intent was always to keep the doors open (unlike Chapter 7, which is liquidation).
- The Strategic Advantage: It allows a large company to obtain new financing (called Debtor-in-Possession, or DIP financing) and slash its outstanding debts and lease obligations with court approval. This is precisely what Red Lobster did, leading to the closure of unprofitable locations to secure a healthier, reorganized business model.
- The Cause: Court filings pointed to over $1 billion in debt, operational issues like the costly “Ultimate Endless Shrimp” promotion (which cost the company an estimated $11 million), high lease payments, and rising labor/inflation costs.
The Professor’s Note: Connecting Chapter 11 to Chapter 13 (individuals)
While Red Lobster’s Chapter 11 case is for a massive corporation, the legal principle of reorganization is directly relevant to consumers handling personal debt.
| Feature | Chapter 11 (Business/High-Debt Individual) | Chapter 13 (Consumer) |
| Purpose | Reorganize debt, restructure business, and continue operating. | Reorganize debt, make monthly payments via a Plan, and keep property. |
| Debt Limit | No limit for businesses. Individuals must exceed the Chapter 13 limit. | Currently, the secured and unsecured debt total must be below $2,750,000. |
The Red Lobster case shows how the Bankruptcy Code is used as a tool to reorganize debt. For individuals who don’t qualify for Chapter 7 bankruptcy, Chapter 13 serves the same purpose: it provides a legal path to stabilize your finances and restructure or reorganize your debt.
Professor Hernandez is an attorney specializing in consumer finance and debt relief. He is the published author of Consumer Bankruptcy Law (Routledge Publishing) and teaches law and finance courses in both English and Spanish for an international university.
Colleges and universities can purchase my bankruptcy law textbook directly from Routledge Publishing. Paralegals and students who are buying single copies can do so via Amazon Books. To access my YouTube channel, click this link.
You can learn more about filing for bankruptcy and the bankruptcy petition via this link. Information on the bankruptcy court system, contact information for trustees, and your state’s exemptions can be found here. The federal bankruptcy exemptions are listed here. The latest version of the 341 Meeting of the Creditors can be found here.
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Please note that the information on this site does not constitute legal advice and should be considered for informational purposes only.
Updated initially on February 22, 2025.
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