Fortress Credit, one of the new owners of Orlando, Florida, U.S.A.-based restaurant chain Red Lobster, has filed a lawsuit against Thailand-based seafood conglomerate Thai Union, alleging the firm owes Fortress USD 65 million (EUR 62 million) following Red Lobster’s recent bankruptcy proceedings.
Thai Union has denied those claims, stating it does not owe any funds.
Red Lobster wrapped up its bankruptcy proceedings in September, and its largest creditor, Fortress, soon became one of the new owners of the chain.
Shortly after becoming an owner, Fortress filed a complaint against Thai Union, saying it had 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.
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.
The promised funding came as Red Lobster was suffering from financial problems linked to Covid-19 closures, and when Red Lobster failed to make required payments to its creditors in the lead up to its bankruptcy proceedings, Thai Union should have been forced to make the payment under the guarantee, according to Fortress.
“Red Lobster failed to make the required payments. Red Lobster’s failure to pay triggered Thai Union’s obligations under the guarantee,” Fortress said.
Thai Union, however, said that Fortress’s claim is barred because it limited Thai Union’s obligations to a specific amount and for a specified time frame, the termination date of which already passed in 2023.
“Fortress has not established, and cannot demonstrate, that the limited guarantee remained in force or effect at any time relevant to the complaint or that Thai Union owes any amount thereunder, as the termination date has occurred,” Thai Union said. “Thai Union, thus, has no obligation to pay Fortress or any other person any amount sought in this action.”
Attorneys for Fortress and representatives for Thai Union did not respond to SeafoodSource’s requests for comment.
