Seafood restaurant chain Red Lobster has filed for Chapter 11 bankruptcy in Florida, the company said in a statement Sunday night.

According to the company, it intends to use the proceedings to "drive operational improvements, simplify the business through a reduction in locations, and pursue a sale of substantially all of its assets."

Last week, Red Lobster's website listed 87 stores listed as "temporarily closed" across 27 states, with some of them having their kitchen equipment up for auction on an online restaurant liquidator.

The liquidator, TAGeX Brands, announced last Monday it was auctioning off equipment last week from 48 locations that have closed, with auctions ending periodically on Thursday. Each winner was set to receive the "entire contents of the Red Lobster location they bid on," the website said.

Red Lobster closings:See which locations are shutting down as company files for bankruptcy

Red Lobster, founded in 1968 and headquartered in Orlando, said in the statement Sunday night it would sell its business to a new entity wholly owned and controlled by its lenders, and that "Red Lobster's restaurants will remain open and operating as usual during the Chapter 11 process." The company has been working with vendors to ensure restaurant operations are unaffected, according to the statement.

"This restructuring is the best path forward for Red Lobster. It allows us to address several financial and operational challenges and emerge stronger and re-focused on our growth," said Jonathan Tibus, the company's CEO, in the statement. "The support we've received from our lenders and vendors will help ensure that we can complete the sale process quickly and efficiently while remaining focused on our employees and guests." 

The company estimates its assets and liabilities are both worth between $1 billion and $10 billion, according to the bankruptcy petition.

Red Lobster considered filing for bankruptcy last month

The seafood chain considered filing for Chapter 11 bankruptcy last month in an effort to restructure its debt, according to Bloomberg.

The company had been getting advice from law firm King & Spalding as it looked to shed some long-term contracts and renegotiate leases, Bloomberg reported, noting that Red Lobster's cash flows had been weighed down by leases and labor costs, among other issues.

'Ultimate Endless Shrimp' promotion led to big losses for Red Lobster

In 2023, the seafood chain's "Ultimate Endless Shrimp" deal became more popular than expected, inadvertently becoming a key factor in a $11 million loss in the third quarter.

The limited-time promotional deal, in which guests picked two types of shrimp to enjoy nonstop for $20, landed a permanent spot on Red Lobster menus in June. Red Lobster's parent company, Thai Union Group, said in November 2023 that the chain was headed toward a $20 million loss for 2023. Now the endless shrimp deal costs $25.

Thai Union Group CFO Ludovic Regis Henri Garnier said in an earnings report call that the company was aware the initial price for the endless-shrimp deal was cheap. The offer was intended to draw customers into restaurants, but orders exceeded expectations, he said.

"We wanted to boost our traffic, and it didn't work," Garnier told investors in November 2023, according to Restaurant Business Magazine. "We want to keep it on the menu. And of course we need to be much more careful regarding what are the entry points and what is the price point we are offering for this promotion."

Contributing: Anthony Robledo & Chris Sims, USA TODAY Network

Gabe Hauari is a national trending news reporter at USA TODAY. You can follow him on X @GabeHauari or email him at [email protected].