Fortress Credit, one of the new owners of Orlando, Florida, U.S.A.-based restaurant chain Red Lobster, sued Thailand-based seafood conglomerate Thai Union for USD 65 million (EUR 63 million) late last year.
Though the lawsuit was recently confirmed to be moving forward, both parties have hinted they may be open to settling the case in the future.
Fortress originally filed the complaint against Thai Union late last year after Red Lobster exited its bankruptcy process, saying Thai Union had guaranteed payment to Red Lobster of up to USD 65 million in a 2022 financing agreement when the Southeast Asian firm was one of the minority owners of Red Lobster.
Thai Union’s board of directors agreed to provide the funding in August 2022 “to support and enhance [Red Lobster’s] liquidity management capabilities,” Thai Union said in its quarterly earnings report at the time.
“Red Lobster failed to make required payments. Red Lobster’s failure to pay triggered Thai Union’s obligations under the guarantee,” Fortress said.
However, Thai Union said that Fortress’s claim is moot because the financing agreement limited Thai Union’s obligations to a specific amount and for a specified time frame, the termination date of which already passed in 2023.
Nevertheless, in a Proposed Case Management Plan filed in the U.S. District Court for the Southern District of New York on 11 February, Fortress said that Thai Union still owes USD 65 million because certain clauses of its contract were not met.
One of the primary points of dispute was that Red Lobster, which operates 565 restaurants in the U.S. and Canada post-bankruptcy, did not retain a permanent chief financial officer and chief executive officer with “qualifications and experience reasonably acceptable to Fortress or had ‘substantial executive level restaurant, retail, or consumer experience in the U.S.,’” Fortress said.
Thai Union continues to insist it has met its obligations.
“It is only now – faced with a clearly losing challenge to the executives’ qualifications – that Fortress [carries out] a transparent, made-for-litigation effort to try to shift losses to Thai Union. In short, Fortress’s attack on the executives’ qualifications has no merit on its face,” Thai Union said. “Fortress’s claim should be rejected in its entirety.”
While both Fortress and Thai Union plan to proceed with the case, they said that attorneys from both sides met on 3 February to discuss the possibility of a settlement.
“Although no resolution was reached, the parties agreed to keep the lines of communication open and, in all events, engage in further settlement discussions before the conclusion of fact discovery,” the companies said.
A Thai Union spokesperson told SeafoodSource the company had no comment on the case, and attorneys for Fortress did not respond to a request for comment.
Despite the ongoing lawsuit, Red Lobster is steadily advancing post-bankruptcy, projecting that it will return to profitability in fiscal year 2026. It aims to produce USD 1.95 billion (EUR 1.9 million) in net sales and USD 2.1 million (EUR 2 million) in net income that year, and then projects net sales to increase to approximately USD 2 billion (EUR 1.9 billion), while net income will grow to USD 13.6 million (EUR 13 million) in fiscal year 2027.
As part of its growth initiatives, Red Lobster has overhauled its menu and has run limited-time promotions, including its new GLOAT: The Greatest Lobsterfest of All Time promotion.
Running from 11 February through 20 April, this year’s Lobsterfest includes 10 dishes alongside a “Create Your Own” option.
“For the first time ever, guests can build their dream plate by selecting two or three lobster entrées, customizing their perfect Lobsterfest feast,” Red Lobster said.
"Lobsterfest is the ultimate celebration for lobster lovers, and this year, we're taking it to the next level with more variety, more flavor, and more ways than ever for guests to satisfy their crustacean cravings," Red Lobster Chief Marketing Officer Nichole Robillard said.
Lobsterfest includes new dishes such as Lobster & Shrimp Linguini and a Lobster Roll, along with returning favorites.
Red Lobster also partnered with retired National Basketball Association (NBA) star Blake Griffin. Customers can order their lobster “Blake Griffin's Way” – Rock Lobster Tail, new Garlic Butter-Poached Maine Lobster, and new Lobster Mac & Cheese on one plate.
The partnership kicked off with a campaign spot that shows how the six-time NBA all-star is “taking his skills to another level,” Red Lobster said.
