Red Lobster, the well-known seafood restaurant chain, is considering filing for Chapter 11 bankruptcy as it seeks to restructure its debt, according to multiple reports. The company has been facing financial challenges, including heavy lease obligations and high labor costs, which have weighed down its cash flows.

Red Lobster, which started out as a single restaurant in Florida in 1968, has gone through several ownership changes in recent years. In 2021, Thai Union Group Plc (BKK: TU), which had previously owned a 25% stake in the company, took full control. However, this year, Thai Union wrote down its stake in Red Lobster, indicating that the company’s “ongoing financial requirements no longer align with Thai Union’s capital allocation priorities.”

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As part of the restructuring efforts, Red Lobster is reportedly working with law firm King & Spalding and is considering a Chapter 11 filing to let go of some long-term contracts and renegotiate a number of leases, according to a Bloomberg report. The move would allow the company to continue operating as it works on cutting its debts.

Fortress Investment Group, a key lender to Red Lobster, is said to be involved in the current debt negotiations.

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