Fortress Credit, one of the owners of U.S. restaurant chain Red Lobster, wants to hold off on mediating its lawsuit against Thai Union North America (TUNA) for USD 65 million (EUR 56.8 million), but Thai Union has signaled it is open to settle the case sooner.
Red Lobster emerged from bankruptcy last fall, and Fortress filed a lawsuit soon after against TUNA, a division of Samut Sakhon, Thailand-based seafood conglomerate Thai Union, alleging the company guaranteed payment to Red Lobster of up to USD 65 million in a 2022 financing agreement when Thai Union was one of the minority owners of Red Lobster.
Both companies agreed to conduct expert discovery on the alleged debt and file a joint letter regarding mediation with the U.S. District Court for the Southern District of New York by 21 April.
Fortress said it would support mediation “at the appropriate time” but explained that the appropriate time would be after the discovery record has been developed and the parties’ experts have been able to form opinions based on the full record. A court meeting on the discovery has been set for this fall.
TUNA, meanwhile, said it is willing to mediate the case sooner and the court should require Fortress to “disclose its basic theory of the case to facilitate more productive, near-term settlement discussions.”
The loan agreement in question terminates on the earliest date when certain executives with requisite experience are appointed and a Red Lobster entity sends compliance certificates showing that it surpassed set targets for consolidated EBITDA in certain fiscal quarters, TUNA said in court documents.
“As Fortress initially acknowledged, such executives were appointed, and the requisite compliance certificates were delivered some time ago. Nevertheless, Fortress now claims that the executives were not qualified, and the ‘Compliance Certificates were inaccurate because there was not, in fact, compliance with the financial covenant,’” TUNA said.
As a result, TUNA is seeking an order requiring Fortress to explain its theory as to why the consolidated EBITDA calculations set forth in the compliance certificates are inaccurate by 1 May.
“This is a discovery issue, and TUNA knows it,” Fortress said in response.
Fortress said it has agreed to produce the documents and data that its claim was based on but “is not bound by the findings of that investigation and is entitled to fully explore its claims in discovery and fully articulate them through expert disclosures.”
TUNA’s attempt to “invade Fortress’s pre-suit work product is unwarranted,” Fortress added.
As a result, there is no reason for Fortress to seek to adjourn the settlement discussions early, the company said.
