The seafood chain noted that while remaining restaurants will continue operating during the proceedings, the number of locations is set to be drastically reduced in the coming weeks.
In a press release, Red Lobster explained that it had entered into a "stalking horse purchase agreement," meaning the company "will sell its business to an entity formed and controlled by its existing term lenders."
"This restructuring is the best path forward for Red Lobster," CEO Jonathan Tibus said. "It allows us to address several financial and operational challenges and emerge stronger and re-focused on our growth. The support we've received from our lenders and vendors will help ensure that we can complete the sale process quickly and efficiently while remaining focused on our employees and guests."
According to the New York Post, Red Lobster's assets and liabilities were listed at between $1 billion and $10 billion.
It had been speculated for some time that the chain was on its way to financial ruin. In April, for example, Jonathan Tibus was brought in to be the new CEO. Tibus made a name for himself in the industry for leading restaurants through the bankruptcy process.
Sunday's announcement came less than a week after Red Lobster shuttered nearly 100 of its 650 US locations and laid off hundreds of employees following news that it had suffered an $11 million quarterly loss, largely due to its endless shrimp promotion.
Among those who found out their location was being closed was a woman named Naomi.
"I just got a phone call this morning saying our location is closed," she said in a TikTok video. "Y'all know Red Lobster was going bankrupt, they don't have no money to be playing around."
"I ain't gonna lie," she warned. "If you work at Red Lobster, you need to start finding something else to do."
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