MJP –
The creditors of a large restaurant have banded together to support a debt-for-equity agreement that would allow the business to continue operating with few interruptions while it emerges from bankruptcy.
To avoid the upheaval of liquidating its assets, the casual dining seafood brand Red Lobster and its creditors have come to terms on a debt-for-equity arrangement. This will allow the company to keep running smoothly.
Among these tasks is the transfer of hundreds of liquor licenses to an entirely new business.
Representing the unsecured creditors’ committee in the action is bankruptcy attorney Brad Sandler, who has stated that the process can take months and that Red Lobster restaurants would not be able to sell alcohol that time.
Consequently, the company’s bottom line would take a hit.
Transferring to one of these 550 sites can cost millions of dollars.
According to Sandler, “If they do a reorganization, there’s substantially less disruption, and disruption is always expensive.” This is because regulatory difficulties will no longer be a concern for the company.
SEE MORE –
Bankruptcy Crisis Hits Florida: Thousands of Preschools Expected to Close
Whoever buys out the Orlando restaurant that recently filed for Chapter 11 bankruptcy with debts of up to $300 million will determine the outcome.
The stalking-horse bidder, Fortress Investment Group, has set the price for the business, and other interested parties have until July 18 to submit an offer.
Many factors contributed to Red Lobster’s financial difficulties, including inflation, leases, and incompetent management.
Before its Chapter 11 bankruptcy filing, the restaurant has already shuttered more than a hundred locations, and additional closures are likely in the works if lease renegotiation efforts fail.
Sandler stated, “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, 2009).
The buyer is reportedly responsible for seeing this through since it is an ongoing procedure (Restaurateur Blog).
