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Red Lobster Files for Bankruptcy amid Growing Debt but Will Remain Open: 'Best Path Forward'

The company confirmed restaurants will remain open and operating as usual during the Chapter 11 process

<p>Eric Thayer/Bloomberg via Getty Images</p> A stock photo of a Red Lobster sign

Eric Thayer/Bloomberg via Getty Images

A stock photo of a Red Lobster sign

Red Lobster has filed for bankruptcy amid growing debt.

Per the Associated Press, a May 19 court filing stated the seafood restaurant chain, known for its endless shrimp deal, has filed for voluntary Chapter 11 bankruptcy in Florida. Red Lobster has over 100,000 creditors and estimated assets between $1 billion and $10 billion, according to the filing.

The outlet added the company's estimated liabilities are between $1 billion and $10 billion, stating that the filing came just days after the chain shut dozens of restaurants across more than 20 states.

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Red Lobster did not immediately respond to PEOPLE'S request for comment.

<p>Getty Images</p> A stock photo of a Red Lobster restaurant

Getty Images

A stock photo of a Red Lobster restaurant

Related: Red Lobster Announces Lobster and Waffles Made with Their Cheddar Bay Biscuits Batter

In a statement, the restaurant chain said it would "drive operational improvements, simplify the business through a reduction in locations, and pursue a sale of substantially all of its assets as a going concern."

It stated the chain "has entered into a stalking horse purchase agreement pursuant to which Red Lobster will sell its business to an entity formed and controlled by its existing term lenders."

Red Lobster's restaurants "will remain open and operating as usual during the Chapter 11 process, continuing to be the world's largest and most-loved seafood restaurant company," per the statement.

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Jonathan Tibus, who was named as the company's new CEO in March, said of the news, "This restructuring is the best path forward for Red Lobster. It allows us to address several financial and operational challenges and emerge stronger and re-focused 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," Tibus added.

<p>Michael Nagle/Bloomberg/Getty</p> A waitress carries a lobster kettle and a crab trio dish at a Red Lobster restaurant in Yonkers, New York

Michael Nagle/Bloomberg/Getty

A waitress carries a lobster kettle and a crab trio dish at a Red Lobster restaurant in Yonkers, New York

Related: Red Lobster's New Bloody Mary Is Topped With a Lobster Claw and Cheddar Bay Biscuit

The news comes after PEOPLE reported that the restaurant chain — which opened its first eatery in 1968 in Lakeland, Fla. — was considering filing for bankruptcy. Bloomberg was the first to report the news last month.

The outlet reported that the Red Lobster had been finding it difficult to make money with their current leases and labor costs, and had been seeking advice from commercial law firm King & Spalding.

Per CNN, the restaurant chain reported a $12.5 million operating loss in the fourth quarter of 2023, despite raising the price of its endless shrimp promotion from $20 to $25.

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The outlet reported in February that Thai Union Group Plc — the largest Red Lobster shareholder since 2020 with a 49% stake — announced its plan to exit the company in January since it caused “negative financial contributions to Thai Union and its shareholders,” according to Thiraphong Chansiri, the CEO of Thai Union Group.

CNN reported the company cited a $19 million loss from Red Lobster over the first nine months of 2023 due to factors including the Covid-19 pandemic, high interest rates, and rising costs. This figure grew to $22 million across the whole of 2023.

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Read the original article on People.