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Ontario Superior Court gives OK to Red Lobster Canada sales process

Click to play video: 'Red Lobster files for bankruptcy protection'
Red Lobster files for bankruptcy protection
WATCH: Red Lobster files for bankruptcy protection – May 20, 2024

An Ontario court has approved a sales process and stalking horse bid for Red Lobster Canada, which is operating under court protection from creditors.

The move comes after a U.S. court approved the sales process for the company which launched Chapter 11 bankruptcy proceedings last month.

Court filings made on June 11 say the steps are meant to “preserve” Red Lobster’s business in Canada and the employment of the company’s 2,000 workers stationed at 27 restaurants across the country.

A stalking horse bid is an offer to buy a bankrupt firm or its assets that is arranged ahead of an auction and typically sets a floor price for the assets.

The documents say the bid will give lenders a chance to sell the company’s assets in a way that maximizes their value and helps them avoid the risk of them being sold for an unreasonably low price.

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The filings made in Canada come after Florida-based Red Lobster Management LLC shuttered dozens of locations in the U.S. recently and filed for bankruptcy protection, which a Canadian court agreed to recognize last month.

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