New owners for Red Lobster revealed - as it emerges the debt-ridden chain owes $21 million for shrimp alone

Bankrupt Red Lobster announced its new owners Monday, while also letting it slip that it may owe its parent company an eye-watering amount for millions of pounds of shrimp.

RL Purchaser LLC, a entity comprised of Red Lobster's lenders, made the initial bid that has so far gone unchallenged by any outside parties.

The troubled seafood chain filed for bankruptcy in May days after shuttering nearly 100 restaurants in the US. 

There's already been whisperings of more closures if landlords aren't able to renegotiate rents downward.

Judge Grace E. Robson of the US Bankruptcy Court of the Middle District of Florida will rule on July 29 whether this proposed sale can proceed.

In the meantime, Red Lobster has about $300 million in debt, some of which is wrapped up in the 3.75 million pounds of shrimp it purchased from its current owner Thai Union Group, according to a document filed with the bankruptcy court by Thai Union's lawyers.

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Thai Union, a Thailand-based producer of seafood based products, estimates this amount of raw shrimp is worth about $20.6 million. 

It came to this valuation based on the value of the inventory itself, as well as costs associated with additional ingredients for the breaded shrimp, packaging, storage and interest that's still accruing on Red Lobster's balance.

Thai Union's lawyers explain that throughout 2023, Red Lobster was repeatedly 'increasing their forecasted demand' for shrimp, presumably to keep up with its $20 unlimited shrimp promotion it launched in June.

But demand changed in October last year when Red Lobster 'unexpectedly and dramatically reduced their forecast multiple times,' Thai Union claimed.

This was around the time bosses at Red Lobster were realizing their tragic mistake, deciding to raise the price of the unlimited shrimp deal to $22 at select locations to recoup losses. 

Thanks to the demand downgrade from its subsidiary, Thai Union says it accumulated 'an oversupply of approximately 5,850,000 pounds of 14/16 prebreaded coconut and 21/23 pre-breaded large shrimp,' both of which are custom items.

Then, Red Lobster allegedly asked for dramatically fewer 'Calabash' shrimp in November, another custom product, leading Thai Union to get stuck with another 1.6 million pounds of shellfish. 

Thai Union now claims, after Red Lobster's debtors purchased $13.07 million worth of all this shrimp, that it is still owed 'approximately $3,684,541 in related costs including ingredients, packaging, storage, and interest.'

In a filing on June 28, the debtors instead claimed they owe $0, citing the joint supply agreement Red Lobster and Thai Union entered into in 2019. 

Since Thai Union objected to the cure amount put forward by the debtors, there will be a court hearing in August to adjudicate this debt dispute, but only after the sale to the lenders is completed.

Experts and even executives at Thai Union have acknowledged that Red Lobster's unlimited shrimp deal, a gambit it introduced in June with the intent to have be permanent, was a colossal miscalculation that sent the company careening into financial insolvency.

Workers at the Thai Union Frozen food processing plant just outside Bangkok clean and prepare fresh cooked shrimps

Thai Union CEO Thiraphong Chansiri, 58, even said out of frustration that he'll never eat lobster again after the bankruptcy. 

Once customers found out they could gorge themselves with as many shrimp as they desired last summer, they got right to work bleeding the restaurant dry.

One girl managed to eat 108 shrimp in four hours.

'I set a new record at my local Red Lobster, this is my greatest achievement in life,' the poster explained in her video. 

More people began to take advantage of the offer than the company expected. But rather than pull the deal, bosses kept it running for six months - and the losses dwarfed the amount lost for endless crabs offer it ran 20 years earlier. 

All told, Thai Union was forced to write off $500 million as it looks to free itself from the financial anchor that is Red Lobster.