Thai Union fights back against Red Lobster mismanagement accusations

Thai Union is fighting back against accusations from Red Lobster CEO Jonathan Tibus that its mismanagement led to the company’s Chapter 11 bankruptcy filing on 20 May.

In court documents, Red Lobster revealed it has initiated an investigation of Thai Union’s involvement in the failure of its Ultimate Endless Shrimp promotion, as well as its “undue influence” on shrimp purchasing.

Thai Union invested millions into the chain in 2016 and then was part of a consortium that acquired it outright in 2020, aiming to find synergies on supply and marketing.

That relationship has since soured, with Tibus saying Thai Union exerted “outsized influence on the company’s shrimp purchasing,” including guiding former Red Lobster CEO Paul Kenny toward Thai Union to continue producing shrimp for Red Lobster that “did not flow through the traditional supply process or bid cycle or adhere to the company’s demand projections.”

“In apparent coordination with Thai Union and under the guise of a ‘quality review,’ Kenny made a series of decisions that eliminated two of the company’s breaded shrimp suppliers, leaving Thai Union with an exclusive deal that led to higher costs for Red Lobster,” Tibus said.

In a statement issued to SeafoodSource, Thai Union disputed that account.

“We are aware of the meritless allegations in the bankruptcy court pleadings and look forward to a full representation of the facts,” Thai Union said. "We are confident that a court-supervised restructuring process will allow Red Lobster to address its financial obligations and restructure its business to realize its long-term potential in a more favorable operating environment."

However, Thai Union is still owed an unknown amount of back payments from Red Lobster. Thai Union Group, Thai Union North America, and Thai Union Seafood Co. are all named as creditors in Red Lobster’s bankruptcy filing.

Performance Food Group and Gordon Food Service are among the largest of Red Lobster’s more than 100,000 creditors. Richmond, Virginia, U.S.A.-based Performance Food Group is owed around USD 24.4 million (EUR 22.5 million), while Toronto, Ontario, Canada-based Gordon Foodservice Canada is owed USD 1.2 million (EUR 1.1 million).

The chain's other major creditors include Rubin Postaer and Associates, The Wasserstrom Company, DoorDash, the law firm Baker & Hostetler, Pepsi Co., and Proctor & Gamble Distribution.

Other seafood industry creditors include Ocean Beauty, Ocean Seafood Depot, Red Chamber Co., Lukes Lobster ME LLC, Seafood Nutrition Partnership, Star Lobster Seafood Market, Blue Star Foods, Devi Fisheries, The Fish Guys, ID Seafood LLC, and Pacific Fresh Fish Ltd.

In court documents, Tibus acknowledged Red Lobster’s problems are ...