Days after Crimson Lobster filed for Chapter 11 chapter and introduced that it might shut dozens of its seafood eating places, the chain’s Canadian counterpart will ask a Canadian court docket to implement the U.S. chapter in Canada, CBC Information has discovered.
An utility might be introduced earlier than the Ontario Superior Court docket of Justice on Might 28 to have the U.S. chapter acknowledged and enforced in Canada, Canadian counsel Linc Rogers confirmed to CBC Information on Thursday.
Crimson Lobster Canada, Inc., a Delaware-incorporated firm that owns and operates Crimson Lobster eating places throughout Canada, was a part of the Chapter 11 submitting within the U.S. It is listed as a “associated debtor” within the submitting.
“There may be presently a keep in proceedings in place in Canada stopping any creditor from taking motion in Canada towards [Red Lobster] Canada and sure affiliated entities,” Rogers wrote.
The informal eating chain, which at its peak operated 700 eating places throughout the U.S. and Canada, posted main monetary losses within the U.S. in late 2023 — partly on account of an all-you-can-eat-shrimp promotion that grew to become a everlasting staple of its menu final summer time.
Daniel So, a franchise lawyer in Victoria, B.C., stated that the Chapter 11 chapter will give the chain time to evaluate which of its Canadian areas are worthwhile.
“It actually offers them a number of runway to determine whether or not they’re going to proceed to function in Canada, or if they will begin closing down a few of the areas up right here,” he stated.
“The true property that they personal up right here may be of nice worth they usually’ll have a while to barter with the landlords and collectors,” he stated.
If the court docket approves Crimson Lobster’s utility — So believes it should — that will stop collectors in Canada from pressuring the U.S. firm that owns the chain’s Canadian areas.
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Court docket filings confirmed that Crimson Lobster was investigating the position that seafood provider Thai Union, which held a minority stake within the firm, performed within the promotion that induced $11 million US in losses.
A spokesperson for Thai Union instructed CBC Information final month that it had exited its funding in Crimson Lobster and wouldn’t remark additional
‘Not a number of evolution’
Robert Carter, an analyst and managing associate on the StratonHunter Group, says he believes there is a chance that Crimson Lobster can proceed in Canada, even with a U.S. shutdown.
“I would not say there was actually robust development, however they’d a great core buyer base, they have been recognized for his or her particular menu choices as that seafood participant general. So that they did carve out a distinct segment,” Carter stated.
Crimson Lobster’s guardian firm plans to ask an Ontario court docket to have the restaurant chain’s U.S. chapter acknowledged and enforced in Canada.
Whereas the chain’s development in Canada has been comparatively secure, Carter says Crimson Lobster operates in what’s referred to as the “premium informal house” of the eating sector, which has seen a number of development within the final decade.
“You consider gamers like The Cactus Membership and Browns Socialhouse and even The Keg with their growth. So, the competitors grew to become way more aggressive and the Crimson Lobster model simply didn’t maintain tempo,” he stated.
“There was not a number of evolution within the enterprise for Crimson Lobster within the Canadian market.”
