Red Lobster bankruptcy: Canadian court

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Signs to a Red Lobster restaurant are shown in San Bruno, Calif., Tuesday, May 14, 2024. (Jeff Chiu / AP Photo)

TORONTO-

Red Lobster Canada will ask an Ontario court next week to recognize a stalking horse offer from its lenders and approve a sale process for its assets.

Court filings on behalf of the Canadian branch of the troubled seafood restaurant chain say the case will go before the Supreme Court on June 18, provided a U.S. court approves the sale process by then.

According to the documents, these steps are intended to secure Red Lobster's business in Canada.

According to the documents, the stalking horse offering provides lenders with an opportunity to dispose of the company's assets in a way that preserves and maximizes their value and avoids the risk that the assets will be sold at a lower price.

Court documents say the offer will be subject to a “market test” to ensure that the company receives the highest or at least the best offer or combination of offers for all of Red Lobster's business or assets.

A lawyer for Red Lobster Canada declined to comment further on the matter.

Red Lobster employs 2,000 people at 27 locations in Canada, while the chain has 550 restaurants in the U.S. Florida-based Red Lobster Management LLC recently closed dozens of locations in the U.S. and filed for bankruptcy under the U.S. Chapter 11 bankruptcy system, which a Canadian court recognized last month.

This report by The Canadian Press was first published June 14, 2024.