Sources say that a huge restaurant is now coming out of bankruptcy as it reveals the purchase of its new partners.
The way out of bankruptcy for Red Lobster was made clear when the chain stated that it had new owners.
The failed seafood restaurant announced on Monday that RL Purchaser LLC, a new company backed by Fortress Credit Corporation, will take over since no one else bid.
Companies that make the first bid on the assets of a bankrupt company and set the price for the bidding start are called “stalking horse bidders.” RL Purchaser was one of these companies.
There was going to be a sale on July 23 when Red Lobster filed for bankruptcy two months ago.
But this didn’t happen because no one bid by the chain’s deadline of July 18. This meant that the stalking horse buyer automatically won the item.
People might not be interested because Red Lobster said at a hearing in July that there would not be a standard asset sale.
The news source says that RL Purchaser paid a huge $376 million for the chain’s assets.
The new company has already bought Vice Media and Alamo Drafthouse, so it knows how to buy failing businesses.
Federal court papers seen by USA Today say that the sale of the assets will be looked at again at an approval hearing on July 29.
Before the approval hearing next week, Jonathan Tibus, CEO of Red Lobster, talked about how the sale of the seafood business will be very different.
The chain will be able to reform and improve its operations now that it is owned by a new company.
The main issues that will need to be dealt with are those that were brought up in the bankruptcy filing as big reasons for Red Lobster’s financial problems.
As Red Lobster filed for Chapter 11 bankruptcy, it shut down a lot of restaurants because it had “a bloated and underperforming restaurant footprint” and billions of dollars in debt.
Its recent financial problems and the all-you-can-eat shrimp deal for just $20 were both put down to the bad economy and more competition.
Financial reports from the third fiscal quarter of last year show that the chain lost $11 million because of that one deal that was meant to bring more people in.