ORLANDO, FLA. — A trust representing Red Lobster creditors filed a lawsuit in May 2024 against former controlling shareholder Thai Union in the Ninth Judicial Circuit Court in Orange County, Florida. The lawsuit requests a jury trial to determine monetary damages and alleges that Thai Union is responsible for financially harmful decisions that contributed to Red Lobster's bankruptcy.

According to the lawsuit, creditors are owed approximately $295 million. Red Lobster filed for Chapter 11 bankruptcy protection in May 2024 and exited in September 2024 after being acquired by RL Holdings, a private investor group reportedly led by Fortress Investment Group.

The lawsuit alleges that in 2023, Thai Union was aware that Red Lobster faced financial challenges and risked insolvency. It states, "Thai Union doubled down on a campaign to squeeze out every drop of value that it could through uneconomic contracts that benefited Thai Union and made no economic sense for Red Lobster." The filing further alleges that Thai Union pressed Red Lobster to purchase increasing amounts of shrimp at above-market prices and banned a competitor from supplying the chain.

Thai Union obtained majority control of Red Lobster in 2020 after initially buying a minority stake in 2016. After taking majority control, Thai Union held three out of five seats on Red Lobster's board of directors. The lawsuit alleges that Thai Union took control of shrimp purchasing by embedding its own operatives in the decision-making process.

Paul Kenny was named interim CEO of Red Lobster in August 2022. The lawsuit alleges that Kenny, not then-CEO Kelli Valade, was in charge upon his arrival. Valade resigned after serving seven months. The filing alleges that Thai Union and Kenny engineered and implemented an endless-shrimp promotion despite objections from Red Lobster employees not affiliated with Thai Union.

"When it was clear that the Everyday $20 Ultimate Endless Shrimp offering was wreaking havoc on Red Lobster and its balance sheet, Kenny doubled down," the lawsuit states. "He responded by continuing the offering—and generating tens of millions of dollars more in overpriced shrimp orders for Thai Union—and ultimately left Red Lobster with a massive oversupply." The lawsuit alleges that Red Lobster lost $11 million in a single quarter due to the promotion. It also claims that Kenny interfered with the process for awarding supplier contracts, banning a longtime supplier of pre-breaded shrimp for a year in 2023.

Red Lobster defaulted on a $275 million term loan from Fortress Investment Group in September 2023. Fortress Investment Group took control of Red Lobster's board after this loan default. Thai Union announced in January 2024 that it would divest its stake in Red Lobster, which it did in May 2024. The lawsuit alleges that Thai Union did not contribute any capital during the bankruptcy process. It claims, "Thai Union treated the company as little more than a distribution arm for its own products, milking whatever value it could from Red Lobster, especially as the company became insolvent."