Red Lobster eyes bankruptcy option after $11M in losses from endless shrimp promotion

Red Lobster is in hot financial waters, attempting to stay afloat by eyeing Chapter 11 bankruptcy to restructure its debts after an endless shrimp promotion sank the seafood restaurant chain's bottom line, Bloomberg reported this week.

According to Bloomberg, the restaurant is considering filing for Chapter 11 on the advice of law firm King & Spalding, which would allow the chain to stay open while dealing with its debt and help reevaluate long-term contracts and leases.

The outlet reported that Fortress Investment Group, one of Red Lobster's key lenders, is also involved in current debt negotiations.

The chain recently added Jonathan Tibus as its new CEO. Tibus has worked with other restaurant chains to restructure their businesses through the Chapter 11 process, including Kona Grill, which filed for bankruptcy in 2019, and the fast foot chain Krystal, which filed for Chapter 11 protection in 2020.

Last year, Red Lobster reported $11 million in operating losses following its flubbed "Ultimate Endless Shrimp" deal, which backfired when it reeled in too many customers after the limited-time promo became a permanent menu fixture last June. The restaurant chain later reported $12.5 million in losses in the fourth quarter of 2023.

Earlier this year, Red Lobster's Thailand-based investor, Thai Union Group, announced it was divesting from the restaurant.

ABC News has reached out to Red Lobster for comment.