The Canadian counterpart of US seafood chain Red Lobster, which recently filed for Chapter 11 bankruptcy, is set to request the Ontario Superior Court of Justice to enforce the US Chapter 11 bankruptcy proceedings in Canada, CBC News has reported.

The application will be filed with the Ontario court on 28 May 2024, Canadian counsel Linc Rogers confirmed.

Red Lobster Canada, a Delaware-incorporated entity that owns and operates multiple Red Lobster locations in Canada, is listed as a related debtor and a part of the US Chapter 11 filing.

Rogers stated: “There is currently a stay in proceedings in place in Canada preventing any creditor from taking action in Canada against [Red Lobster] Canada and certain affiliated entities.”

Red Lobster recently announced the closure of at least 48 locations in the US.

Red Lobster ran 700 restaurants across the US and Canada but suffered substantial financial losses in the US late in 2023, exacerbated by an “all-you-can-eat” shrimp promotion that had become a permanent fixture in the summer and led to losses of $11m.

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Court filings indicate that Red Lobster was probing the role played by seafood supplier Thai Union, which had a minority stake in the promotion.

In April 2024 a Thai Union spokesperson told CBC News that it had exited its minority investment in Red Lobster and would not comment further.

Franchise lawyer Daniel So from Victoria, British Columbia pointed out that the Chapter 11 bankruptcy would allow Red Lobster to assess the profitability of its Canadian locations.

If the court grants the application, it would shield the US parent company that owns the Canadian restaurants from creditor pressures in Canada.

So was quoted by CBC News: “It really gives them a lot of runway to figure out whether they are going to continue to operate in Canada, or if they’re going to start closing down some of the locations up here.”

“The real estate that they own up here can be of great value and they’ll have some time to negotiate with the landlords and creditors.”