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Red Lobster's Payment Delays Escalate, Suppliers Left Waiting
According to FSR Magazine, Red Lobster's bill payments experienced a notable deterioration in January and February 2024. In January, a staggering 96.18 percent of bills were settled past their due dates, with payments typically delayed by 26 days. Similarly, in February, 74.2 percent of bills were paid overdue, with the typical turnaround time reaching 47 days past due. Creditsafe revealed that nearly 60 percent of Red Lobster's bills were settled between 61 to 90 days late during this period.
March maintained a similar trend, with Red Lobster typically settling bills 48 days past the due date, as reported by Creditsafe. The volatility in payment patterns, highlighted by drastic spikes, raises concerns about the company's cash flow forecasting and its ability to navigate challenging market conditions, according to FSR.
Amidst financial struggles, Bloomberg reported on April 16, 2024, that Red Lobster was considering a bankruptcy filing, while CNBC indicated that the company was actively seeking a buyer to avoid bankruptcy. Despite interest from potential buyers, including at least one firm, no deal materialized.
A potential Chapter 11 bankruptcy filing could enable Red Lobster to restructure long-term contracts and negotiate lease terms. Thai Union, which had invested in Red Lobster since 2016, announced its intention to exit the strategic partnership in January. Despite previous efforts to address financial losses through refinancing and operational adjustments, Red Lobster's challenges persisted, ultimately leading to its current predicament.
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