Is Red Lobster Headed For Bankruptcy?

At Red Lobster, families can chow down on cheddar bay biscuits and seafood at relatively reasonable prices. But when finances are tight, it doesn’t matter how much you can save on shellfish at one restaurant compared to another. Given the choice between paying bills and eating lobster, most people will prioritize their bills. With the cost of living increasing at rates that are out of control, there is less room in families’ budgets for dinners at seafood restaurants. Despite several valiant efforts to revitalize its menu and business plan, it appears that Red Lobster could be headed for bankruptcy.

There are plenty of choices for restaurants not just on the Las Vegas strip but all across Nevada. Most tourists coming to Las Vegas would rather eat at a specialty restaurant than a chain restaurant that they can get at home, anyway. Therefore, it is no surprise that Red Lobster’s profitability has been down in recent years. There are other factors contributing to this decline, such as increased costs in food and labor since the pandemic. Many states are increasing their minimum wages which causes Red Lobster to spend more on staffing. If menu prices aren’t increased accordingly, it’s hard for a restaurant to turn a profit. On the other hand, customers don’t want to see prices go up and may be more resistant to dining out if they know it will be enormously expensive. Inflation has caused the price of just about everything to go up so many people no longer have room in their budgets for Red Lobster dinners.

The fact that many restaurants are struggling isn’t the only reason that experts predict that Red Lobster will soon be bankrupt. Its current CEO, Horace Dawson, who only took over in September 2023, is retiring and being replaced by Jonathan Tibus. He is the manager of a consulting firm that has led other chain restaurants like Krystal and Kona Grill through chapter 11 bankruptcy. This is after former CEO Edna Morris got the sack for creating a $22.99 all-you-can-eat crab dinner option on the menu that lost Red Lobster millions. The company underestimated how many patrons would be able to eat third and fourth servings. The company that owns the Red Lobster brand, Thai Union Group, has announced its intentions to offload the floundering company, and even expects to do so at a loss. It has taken a $527 million writedown in anticipation of the sale, which experts believe would be most effective if preceded by bankruptcy. Chapter 11 bankruptcy could allow the company to clear debts without taking away the ability to operate, as a chapter 7 bankruptcy filing would.

There are currently four Red Lobster locations in Nevada. They are located in Henderson, Las Vegas, North Las Vegas, and Reno. This means a significant number of jobs could be impacted by this bankruptcy filing. If you have questions about filing for bankruptcy in Nevada, our firm offers free consultations by phone. Call 702-899-3328 to schedule yours today.

The Individual Consumer Bankruptcy Filing

Chapter 11 bankruptcy is a vast and complicated area of law, so it’s no wonder that Red Lobster retained a new CEO with such specific experience. His expertise will not replace bankruptcy legal counsel or professionals such as accountants and other experts. While the average consumer won’t need to take such extreme measures to discharge debts, hiring an attorney is always advisable. A bankruptcy attorney can help a debtor determine if there is a different debt method that could serve their needs, which chapter is appropriate to file, how to address requests and questions from the bankruptcy trustee, and more. Before making any final decisions about your potential Nevada bankruptcy case, schedule your free consultation with our firm by calling 702-899-3328.

Chapter 7

If you own your own small business, this may be one of the chapters of bankruptcy that you consider. It requires that the business shut down, but there are workarounds- for example, if the business doesn’t have substantial assets, the owner can usually close the business and reopen it under a name that is different to comply with the law, but similar to retain customers. Besides being an option for businesses, it is the most popular form of personal bankruptcy. This is due to its massive benefits and relative simplicity- however, not everyone qualifies for this form of debt relief.

All bankruptcy debtors are required to submit a document regarding their income as part of their bankruptcy petitions. It is known as a Schedule I, or Form 106I. Calculating income often isn’t as simple as dividing annual income by 12. Other household members’ income must be considered, but so can certain deductions from the debtor’s paycheck. The income derived from this schedule must either fall below Nevada’s median household income or pass the means test for the debtor to qualify for chapter 7. The debtor should also confirm that Nevada’s bankruptcy exemptions will protect their assets. Unprotected assets can be seized by the bankruptcy trustee and sold at auction to pay back creditors.

Chapter 7 bankruptcy wipes out debts that are unsecured and don’t have priority status. Some examples of unsecured priority debts include child support, student loans, and some taxes. When an individual doesn’t qualify for chapter 7 or their debts aren’t suitable for chapter 7, chapter 13 may be a preferable option. The Law Office of Erik Severino can help you determine your eligibility for chapter 7 bankruptcy in Nevada and provide you with payment plan options, if applicable. Call 702-899-3328 to schedule your free consultation today.

Chapter 13

Chapter 13 operates differently than chapter 7 because it pays off debts in a consolidated payment plan rather than simply erasing them. That means that instead of showing their income is low enough to qualify, a debtor must show that their income is high enough to pay off certain debts. Unsecured non-priority debts can be cleared at the end of the payment plan to the extent allowed by the debtor’s income. Chapter 13 can be advantageous for a debtor trying to protect a secured asset from creditors, such as their home. Chapter 13 can pause foreclosure proceedings, give the debtor an affordable way to catch up on arrears, and even clear secondary mortgages on the home. To see how much you would pay each month in a chapter 13 bankruptcy payment plan in Nevada, call 702-899-3328 to schedule your free consultation with the Law Office of Erik Severino.

Bankruptcy Expertise To Achieve Your Debt Relief Goals

Because the different chapters of bankruptcy serve different purposes, it can be difficult to figure out which will suit your situation the best. Our team aims to simplify every step of the process, including the consideration phase of filing for bankruptcy. That’s why we offer free consultations by phone for Nevada residents considering bankruptcy. Most of our clients also qualify to file with our low or zero-money down payment plan options. To get the answers to all of your questions about bankruptcy, call 702-899-3328 to schedule your free consultation or contact us at Henderson Bankruptcy Lawyers.