Red Lobster Lawsuit Alleges Thai Union Drove Bankruptcy

Red Lobster's liquidation trust, the Red Lobster GUC Trust, filed a lawsuit this week against former majority stakeholder Thai Union Group, alleging the Thai seafood company deliberately drove Red Lobster into bankruptcy. The lawsuit claims Thai Union treated Red Lobster as a mere distribution channel for its own products, extracting value while the company was becoming insolvent. This included restricting Red Lobster's seafood supplier options and pushing for the financially ruinous "Everyday Endless Shrimp" promotion.

According to the lawsuit, Thai Union influenced Red Lobster's leadership, leading to the resignation of the former CEO and the appointment of Paul Kenny, a Thai Union employee, as interim CEO. Kenny and Thai Union allegedly compelled Red Lobster to purchase "overpriced Thai Union Shrimp" even as the company faced insolvency. The lawsuit characterizes the "Everyday $20 Ultimate Endless Shrimp" deal as a deliberate strategy to "squeeze out every drop of value" from Red Lobster.

Despite warnings from company leaders about significant potential losses, the decision was made to proceed with the Endless Shrimp deal. The lawsuit asserts that the combination of "overpriced" ingredients and the low price point of the promotion directly contributed to Red Lobster's bankruptcy filing in 2024. The promotion, which became a permanent menu item in June 2023, offered unlimited shrimp servings for $20, a price point that proved unsustainable for the restaurant chain.