Red Lobster is reportedly considering filing for bankruptcy after suffering heavy losses from its never-ending shrimp trades

Red Lobster is considering filing for Chapter 11 bankruptcy because it grapples with mounting debt.

The seafood restaurant chain is facing challenges generating profits under current leases and labor costs and is looking for guidance from law firm King & Spalding to explore restructuring options, People Magazine reported.

While sources say Red Lobster is still undecided on whether to file for bankruptcy, the move would reportedly allow it to proceed operating while it really works out its next move, which could include renegotiating leases and terminating some contracts.

Red Lobster is famous for its infinite choice of shrimp, which became a everlasting feature on the menu last June. According to People magazine, the corporate raised the worth from $20 to $25 in response to the losses.

Despite infinite shrimp promotions, the restaurant reported an operating lack of $12.5 million within the fourth quarter of 2023.

In January, Thai Union Group Plc, which acquired Red Lobster in 2021, announced it was parting ways with the chain on account of “negative financial contributions to Thai Union and its shareholders.”

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Over the past few months, Red Lobster has continued its efforts to generate publicity. In February, the chain announced that it would offer a free infinite lobster meal to a limited number of shoppers during its annual Lobsterfest.

The restaurant chain also introduced its first-ever Endless Lobster Experience, during which 150 winners from across the country could enjoy a free two-hour dinner of unlimited lobster, two sides and the chain’s famous cheddar cookies.

Last month, the corporate named Jonathan Tibus, known for his expertise in “restructuring restaurants on the verge of bankruptcy,” People reported, as its latest CEO.