How Red Lobster Chapter 11 Will Affect New York Diners

Thousands of diners in New York State received a shock last week when Red Lobster announced it was closing several locations across the state immediately.

Officials with the Red Lobster corporate office took to social media to address concerns and rumors of the Chapter 11 filing and what it means for the company and diners who love their food.

WHAT IS CHAPTER 11 BANKRUPTCY?

Chapter 11 of the United States Bankruptcy Code, is a type of bankruptcy that allows businesses and individuals to reorganize their assets and liabilities under court supervision. This allows the business to continue operating while developing a plan to pay back creditors.

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The company is hoping that the Chapter 11 filing will allow them to continue to operate and get themselves out of the debt that they are currently in. This means that the current locations still open in New York State could remain open.

Several locations, including all the ones near Buffalo, New York were closed this month as part of the cost-cutting move made by the company ahead of the Chapter 11 filing.\

READ MORE: COULD ANOTHER MASSIVE CHAIN RESTAURANT CLOSE IN NEW YORK STATE? 

As part of the Chapter 11 filing Red Lobster said their current 600 restaurants would continue to operate normally while the company intends to simplify operations, close locations, and pursue a sale. As part of the filing, Red Lobster plans to sell its business to an entity formed and controlled by its lenders.

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