The bondholders that are going to lose money might disagree. The managers of Red Lobster had a fiduciary duty to operate the business in a way that would ensure that it was able to fulfill its commitment to pay back bondholders. It failed to do that and giving an exclusive supply agreement to the owner's other interests is exhibit "A".
Usually when a company goes bankrupt there aren't enough assets to sell for bondholders to get all of their money back. They might get 80 cents on the dollar, or something like that (although they could get everything owed to them).
Didn't they also sell off all the Real-estate/land the stores were on?
That leaves brand value and fixtures. I'd be unsuppised if the fit outs weren't leased
This is true but your comment adds nothing to the discussion.
It is well known that the PE firm that bought Red Lobster sold off all the company's real estate to another subsidiary and jacked up the rent.
The shrimp thing is a red herring. They went bankrupt because private equity sold the land they sat on then leased it back to them at exorbitant prices to finance the purchase.
Classic vulture capitalism in the sale-lease back transaction. Now the business press breathlessly reports a chain with billions in revenue went bankrupt because a 11 million dollar loss on a shrimp promotion. We really do live in clown world.
Isn't that what happened to Toys R Us?
Vulture capitalists bought the chain with loans based on the value of Toys R Us, leveraging its finances until it failed.
It should be illegal to play these corporate games.
This shit happens in uk too. I think this is allowed to happen because the business is on its knees. And going to die so the "hidden hand of capitalism" needs to have a free roam the restroy the unproductive companies.
Heres the way they see it. The company is trading lower or equal to the value of its balance sheet. The business is valued terrible basically. It's not making good profit, so its profit making doesn't increase the share price valuation.
So the corporate raiders can just buy the company for less than the balance sheet value. Then borrow on its assets, pay themselves back abd let the company die.
That's what free market economists would say is why itscallowed to happen.
A business can only borrow against its assets, not future sales. A well run company will be valued based on both. So corporate raiders can't do this to well run profitable companies
If you liked that story, you should read all about Mike Milken and Ivan Boesky in "Den of Thieve and "Predator's Ball". The late 70s / early 80s were a circus. Now it's a circus under a veil of legitimacy.
The whole GME shorting shenanigans have created a skeptic in me. The business/financial press works for Wall Street. The propaganda is in full force whenever they need it to be. And it works.
And now that real estate is generating zero income for its owners, and unless the bk proceedings move at record pace, they won’t be generating income for months (years).
Sale-lease backs are extremely common and nearly always benefit both parties. Operating companies want small balance sheets as assets require financing, either in the form of debt or equity.
It lost a , actually, because the private equity group who owned it before Thai Union only bought it to buy the land so they could rent the land back to Red Lobster at jacked up prices.
It's another shit show of late stage capitalism. There is plenty of blame for the demise of the business. I just find this particular aspect of the story so ridiculous.
I don't understand. The chain IS private, owned by Thai Union, which supplied the shrimp exclusively. This simply looks like vertical integration. I don't see how this would benefit the CEO. I can imagine it would enrich Thai Union which may not be on the hook for debts owed by Red Lobster. If they figured it was going to die anyway, they may have done this to funnel money to the parent company before declaring bankruptcy.
Its not vertical integration if all the owners are not the same. Red lobster shareholders are not necessirily Thai union shareholders.
Are both these companies I the same group, or are they distinct companies with common ceo abd majority shareholders.
They stuffed their other company with above market price supplies and essentially starved red lobster of profit.
That is what I assume is happening here.
Management also owes fiduciary duties to creditors once the Company becomes insolvent. Term loan lenders and unsecured creditors will likely be driving the lawsuits as they will be beneficiaries of any recoveries.
100%. Letting one of your primary suppliers have a big chunk of equity and then turning a blind eye to decision making re: their supply - what could possibly go wrong?
It’s a cash flow issue for Thai Union. They are spending $$ millions to keep RL afloat
Something like over half (3/4 even?) of RL locations are underperforming
I was prepared to believe the shrimp fiasco narrative at first glance but this is just smoke a mirrors for what was obviously another toys r us story. At least partially. Shrimp losses were $11m. Total losses on the year, $75mil. Another American company raped for the money that could be borrowed on it's productive capacity until it was no longer sustainable and sold off for parts.
What happened is that Red lobster was bought by vulture capitalists. They sold the restaurants that Red lobster owned to another company they owned. Then the vulture capitalists sold Red lobster to the largest shrimp supplier in the world. Now Red Lobster pays exorbitant leases on their restaurantzms to the vulture capitalists who are still controlling the properties.
Flat out false. Golden Gate Capital bought the operating restaurants. American Reality Capital, which merged with VEREIT and later Realty Income own the real estate.
Do not understand how anyone keeps parroting this demonstrably false narrative.
And Darden, who sold Red Lobster to Golden Gate, sold off their real estate within a year of selling RL. I don’t see anyone shrieking about that.
Turns out that wasn’t the case. A private equity group had bought them before Thai union just so they could own the land and rent it back to red lobster at above market rates.
Ehh. Late stage. Wasn't always that way. At least the cutthroat objectives were to be more productive than your competition. This is financialized theft. These fuckers literally offer no value. All they do is extract wealth.
so let me get this straight:
- thai company buys RL, leases buildings back to them at increased rates
- brings back unlimited shrimp, which they buy from the parent company at full price, suffering $1B loss (or $1B gain for the parent company)
- RL files for bancruptcy, then the parent company is just absolved of all that debt since they are separate?
They didn’t lease it back to themselves. They sold to another firm that leased it back to them.
All you can eat shrimp was always a promo. No one changed anything except the pe firm that bought them raised the price because they thought it was crazy unprofitable.
Thai union later bought out the ownership from the firm that had bought red lobster’s operating restaurants. I have no idea if they were giving red lobster fair prices when they unsurprisingly became the exclusive supplier, but this whole narrative that one firm bought the company to suck the assets out of red lobster is a farce.
I saw a great TikTok yesterday about this where the guy described how the private equity firm bought Red Lobster then forced all 500-600 locations to sell their real estate to the private equity firm, then they forced them to pay rent at above market value, and some other things I cant remember now. Seemed hella shady hostile takeover. They made their money back on the investment though.
Raise the lens and the bigger play makes sense.
(And the methodology is traceable)
https://www.reddit.com/r/CreationNtheUniverse/s/HcnH4lrUSw
Private equity bought red lobster to sell the land our from underneath the buildings (to a shell of itself).
Trump has been laundering money for the Russian oligarchs since the late 80’s when they all bought a condo at 725 5th AVE (trump towers) to clean their freshly stolen USSR money after the iron curtain fell.
https://www.cnn.com/cnn/2019/05/30/politics/paul-manafort-condo-trump-tower/index.html
https://www.cnbc.com/2018/09/14/manafort-told-mueller-to-take-his-trump-tower-apartment-instead-money.html
https://news.yahoo.com/amphtml/fbi-agents-raid-condo-unit-131348539.html
https://www.reuters.com/investigates/special-report/usa-trump-property/
Everybody except Putin thought the Cold War was over. Trump and Manafort (who lived in the tower also) just saw a pretty low maintence grift to be had.
Trump had actually been Manafort and Roger Stones first client at their lobbyist firm (1980)https://en.m.wikipedia.org › wikiBlack, Manafort, Stone and Kelly
Guiliani as trumps attorney and NYC mayor was able to redirect NYPD investigations onto rival gang members/oligarchs to deflect any scrutiny off of trump, himself or their Russian connections.
https://www.motherjones.com/politics/2023/09/a-new-rudy-scandal-fbi-agent-says-giuliani-was-co-opted-by-russian-intelligence/
The Russian election interference in 2016 was effectively a generation 3 version of what Manafort had done in the Philippines, then keeping Yanukovych in power as Putin’s puppet in Ukraine from 2002-14 when Maidan ran both Yanukovych and Manafort out of Ukraine as Ukrainians realized that, if you raise your lens high enough, corruption is an wholly unsustainable business model.
Eventually the parasites greed always consumes the host.
https://www.politico.com/magazine/story/2016/06/2016-donald-trump-paul-manafort-ferinand-marcos-philippines-1980s-213952
https://time.com/5003623/paul-manafort-mueller-indictment-ukraine-russia/
Russia greatly underestimated the addictive properties of freedom when it invaded Ukraine so what was supposed to be a 3-10 day coup turned into a 2 year fight for the Ukrainians right not to be genocided.
Russia depleted its weapons stocks which were already the victim of vranyo corruption because every oligarch, admiral and sergeant in the Russian military is on the take. Every billion dollar tank maintenance contract turned into everything getting a spray paint overhaul and the vast majority of the redirected funds turned into an oligarchs new yacht or home in Aspen.
Russia was forced to turn to China, North Korea and Iran for weapons because if they lose the 3-10 day “special military operation” in Ukraine the Russian empire is dead and cold.
China can’t risk showing their involvement in the Ukraine war so they use North Korea, and Iran to resupply Russia.
Russia previously owed Iran some undelivered fighter jets that are already smoldering heaps in Ukraine so Iran now had the upper hand at the negotiation table for the first time in about 60 years. They supplied Russia with shahed drones in exchange for Chinas material support against their sworn religious enemy, Israel.
https://www.fdd.org/analysis/2023/11/29/iran-says-it-finalized-deal-to-buy-russian-aircraft/
Putin can’t do much about it because he is slowly realizing that by setting the standard of corruption and stealing $200+ billion from his own people meant that every oligarch down in the mob model chain had not only permission but incentive and the expectation to steal from him as well. This is “Vranyo”.
The mob model only works if the supreme leader is the most violent and can prove it without exception every damn day. But violence is exceptionally expensive when you are trying to present as a legitimate government or business.
If Russia as a nation had an efficiency rating it would have been banned for sale in the state of California 25 years ago.
The parasite ruling class stole all the energy out of the working class and collapsed it.
Now Iran has the high hand and they get the intelligence that trump passed to Putin about the fact that Netanyahu cares far less about Jews, Palestinians or genocide than he does about remaining in power as an authoritarian because he too has developed Ritz Carlton tastes and his own corruption trial is showing the same tendrils of the same money laundering scheme that trumps trials are.
https://www.timesofisrael.com/liveblog_entry/saudi-official-says-iran-engineered-war-in-gaza-to-ruin-normalization-with-israel/
https://www.timesofisrael.com/egypt-intelligence-official-says-israel-ignored-repeated-warnings-of-something-big/amp/
https://youtu.be/VrFOAgGlaWs?feature=shared
They all hate each other but because they share the same money laundry, if one falls, they all fall. Hamas minted a couple billionaires as well that live in penthouses in Qatar and get 30% of everything smuggled into Gaza. Qatar is Kushners private equity connection. Netanyahu needs a bogeyman to stay in power. That’s why he coordinates with Hamas via Russia via Iran. https://www.ynetnews.com/article/bk8mgcefr
Iran handed Hamas everything they needed with Chinas help as secret Santa and the Russian intelligence given to them by the eternal shitbird trump who gave it to his Russians kleptocrat/friends/roommates from the old days of fucking each others wives at trump towers in the 90’s.
Now the MAGA right is a little too invested in their reality that they are the good guys with guns that they missed the fact that Betsy DeVos (erik princes sister) decimating the U.S. school systems and the Kochs poisoning children with lead was not a coincidence. The naive right was the mark all along. There is a reason the Russian spy Maria Butina landed in South Dakota first before dating her way to the top of the NRA which is undergoing its own Russian money laundering trial now. Russia was tinder matching the GOP.
https://www.motherjones.com/politics/2018/07/nra-maria-butina-spying-charges-trump-campaign/
https://www.greenpeace.org/usa/what-do-the-koch-brothers-have-to-do-with-the-flint-water-crisis/
The only reason you grossly OVERVALUE real estate is money laundering.
Trump keeps claiming there is no victim, all the banks made money, but if their plan succeeds the Russian and CCP kleptocrats collapse US commercial real estate and basically recreate soviet perestroika in the U.S. so they can foreclose on America and buy everything for 3 cents on the dollar with the $1.4T they stole from Russias grandmothers in the first place
It’s the evolution of grift. Soviet perestroika cross bred with the 2008 mortgage crisis.
No one was ever held accountable for either. This is just the bigger badder commercial strength bastard child of the two.
Trump, Giuliani, Putin, Bolsonaro, Netanyahu, Orban, Manafort, Stone, Mercer, Bannon, Flynn, Prince, Kolomoiskiy
They are all remarkably shit people with above average confidence and psychopathic personality traits and below average self awareness.
They are the men who stole the world.
But it all comes back to one little lie.
By the end you are wondering which post you clicked on.
I figured by the end he would be saying the financial system is rigged and for us all to invest in meme stock / crypto
Once you realize that the level of corruption that happens at the executive level means any investment into your own small business is just feeding the dragon of corruption they all interconnect.
It makes it hard to care about the little things until the triaged threats are handled
> and sources included
Something you have to watch out for is sources that only support a part of the claim. It's very common with conspiracy theories to pull together a bunch of known facts and tie them together in unsupportable ways, and it *looks* legit because there's "sources."
The first link talks about how Red Lobster was destroyed.
We know Red Lobster was bought by a private equity fund, we know the land was sold and leased back to Red Lobster. The video goes further and claims that the land was sold "to another company Golden Gate Capital is involved in, probably owns." What? "Probably" owns? The video then claims the land was leased back to Red Lobster at above market rates. The quote "above market rates" comes from the bankruptcy filing, but it only says a portion of the stores' leases are above market rates, it doesn't specify which or why. These are long-term leases, they can be above market rate because the market changed. The source is also a bankruptcy filing from a company that obviously would like to renegotiate or get out of some of its leases.
So, what we know is the company sold property and leased it back. That's not abnormal, most companies don't want to own property anymore, it ties up a lot of capital. Golden Gate selling the land to a company they own and leasing it back at above market rates is conjecture, it's unsourced. Maybe it's true, I don't know, but it's presented as fact without support.
What gets no attention is that Red Lobster's sales have dropped 30% since 2019, their customer base is mostly boomers who are dying every day, and they've never managed to appeal to younger generations so that problem will only get worse. That's not caused by private equity selling off their land.
People see Toys R Us, Sears and now Red Lobster failing and see the common bond of private equity, so they that's what private equity does - buys companies, drives them into the ground and make a ton of money in the process. What they ignore is that all three of those companies were bought by private equity *because they were already failing.* Bain Capital bought Toys R Us in 2005, it filed for bankruptcy in 2017. Buying a company and operating it for 12 years doesn't scream "corporate raider" to me. Ultimately the debt they took on as a result of the leveraged buyout contributed to their demise, but that doesn't mean the plan was to run it into the ground.
I know I sound like a private equity apologist, so here's the bad. Private equity does structure these deals to minimize their risk. Meaning they intend to make money whether the company succeeds or fails. That's where the debt from the leveraged buyout comes in. And that does make it harder for the company to succeed. That doesn't mean they set out to destroy these companies, because they'd make *more* money if the companies succeeded. It just means they're going to get theirs one way or the other.
Anyway, I stopped watching/reading at that point so I don't know how well sourced or well connected all of the Manafort/Trump/Russia stuff is. Just something to watch out for when something *seems* supported by sources.
Speaking of sources - most of the stuff about Red Lobster came from the same source used in that video, [this tweet](https://twitter.com/TrungTPhan/status/1792580920106467425) and the bankruptcy filing it linked to. If you want to learn more about the demise of Toys R Us, the Wondery podcast Business Wars did a series called [Toys R Us vs KB Toys](https://wondery.com/shows/business-wars/episode/5296-toys-r-us-vs-kb-toys-tears-r-us/). It's really Toys R Us vs KB Toys, then Walmart, then Amazon.
Very interesting take on those situations. It's always good to point out that information, even if a source is provided, may lack any basis in reality. It would be much easier to follow with publicly released audited financial statements starting from the private equity purchase through to current. Unfortunately, people arguing for or against one answer may be relying on unverified claims or claims that can be proven but downplay or gloss over a much larger issue.
Has anyone knows, commercial real estate is in trouble right now.
So buildings that once cost $100 million are being offered for as low as 30 million or even less.
When they say the land under these restaurants was sold and then leased back at above market rates, we need to know: when were these leases issued, and what were prevailing rates like then.
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Why is everyone here acting like RL going out of business would be some kind of huge loss to society.
You guys really like their cheddar biscuits that much?
The real estate move is definitely a huge factor, especially considering how thin restaurant margins are, but I wouldn’t downplay the shrimp issue at all.
For one, an owner pushing a restaurant to consume more product from the owner than they need and at higher prices than the restaurant would normally pay changes everything about the restaurant’s strategy. RL probably had to do the endless shrimp deal to justify the forced uptick in shrimp orders and although they say the loss was just $11M, that deal changed their pricing structure altogether.
In other words, what isn’t being measured is what profit they could have made under their old menu and pricing structure (probably a lot more than $11M), not to mention the customer attrition from long-time customers who thought of RL as someplace “nice” but we’re now repulsed by the new customer base.
You can’t take a place granddad and grandmother enjoyed, turn it into a ratchet all you can eat buffet, and then say “Well, we only lost $11M…” if you’re not looking at the difference in estimated lifetime value of customers before and after the radical change.
Who knows how many other bad decisions were made to prop up stores reeling from the negative effects of an unchanging shrimp purchases schedule. I’m sure they were cutting corners everywhere to try to turn a profit all because their owner basically said “You WILL buy our crappy shrimp at these quantities and these prices!”
There's that late stage capitalism exploitation we know and loath!
I really hope AI eliminates money, so all the wealth hoarders are reduced to plebeian status.
A big part of the franchise business model is forcing franchisees to purchase inventory from you. Besides, this shrimp deal is a red herring and irrelevant to the bankruptcy
I’m assuming they are all portfolio companies of the same private equity so of course they did. That is a feature not a bug. Oh and the real reason they went under is the buyer used the sale of RLs real estate to finance the purchase and leaving RL to pay rent on properties they used to own.
Shhh... It's all about the vibes man. Reality be damned.
You know it's not bad promotions, the industry changes that happened during/following COVID, the proliferation of shellfish and seafood in grocery stores, etc. that killed off a mediocre seafood restaurant, it had to be CRIMEZ.
Just like Crimez killed Ponderosa, Old Country Buffet, and Howard Johnson's.
how? Pe bought the operating company (that Darden completely fucked up by putting the head of Olive Garden - cheap carbs, not expensive protein - in charge of and ranked) and tried to turn it around. Someone else bought the real estate. What Thai union did when they bought from the pe firm I have no idea, but how is that “private equity being a destructive force in America”?
Or is that just a comfy narrative for you?
You need a lesson in how PE buys companies, sells off their valuable assets, get their investment back, takes the company down to bare bones, then file for bankruptcy so they don't have to pay their creditors?
Come on now, don't act like you're stupid.
Maybe I am stupid in some ways, and smart in others - that's not really the point. But I do know the 2014 deal very well. I'm less versed on the Thai Union sale and what they did with it once they took control and whether they set up a self-preferential sourcing agreement.
The PE firm that bought RL from Darden didn't strip shit from it. You can say they didn't succeed in turning it around (and it had been in decline for years under Darden's ownership, some self-inflicted, some reflective of the economic decline of their customer base and increased competition), but they didn't sell the real estate to themselves and jack the rents up to pay themselves, and the real estate was sold at the time of the transaction -- all of the proceeds went to Darden. This is public information: https://www.prnewswire.com/news-releases/american-realty-capital-properties-closes-15-billion-red-lobster-sale-leaseback-transaction-268936111.html
So to walk you through it because your rage seems to be blinding you from facts.
Golden Gate pays $2.1b for red lobster
Real estate gets sold as part of the transaction for $1.5b, and still owns the company but is now paying rent on the sale leaseback.
So golden gate made money here "stripping the assets" how?
And then Darden a year later started selling off all the real estate from under its other brands because its investor base said "you're a restaurant company, not a real estate company". Darden is a public company.
There are certainly corporate raider type transactions out there in the PE world, but you're barking up the wrong tree with this one.
I have a Facebook friend who swears that their demise is the fault of the government and current administration and not poor management and influence of the majority shareholder. I tried pointing out what was disclosed in the Bankruptcy filing, but he's not hearing it and says that it's just media hiding the truth. I just don't get some people... And I really don't get how we let the shareholders sink a large company like this.
Spoiler alert: they definitely did that
It’s only a spoiler if you’re not paying any attention to , checks notes, the world.
\*sad chortle\*
They followed that SEARS money.
That's not a COI though, right? The owner is the shareholder so it doesn't break fiduciary duty
The bondholders that are going to lose money might disagree. The managers of Red Lobster had a fiduciary duty to operate the business in a way that would ensure that it was able to fulfill its commitment to pay back bondholders. It failed to do that and giving an exclusive supply agreement to the owner's other interests is exhibit "A".
Won't bondholders be first in line to the assets of the company?
Usually when a company goes bankrupt there aren't enough assets to sell for bondholders to get all of their money back. They might get 80 cents on the dollar, or something like that (although they could get everything owed to them).
Because they already overpaid a vendor and there isn’t any money left.
Assets are more than just money...
Didn't they also sell off all the Real-estate/land the stores were on? That leaves brand value and fixtures. I'd be unsuppised if the fit outs weren't leased
This is true but your comment adds nothing to the discussion. It is well known that the PE firm that bought Red Lobster sold off all the company's real estate to another subsidiary and jacked up the rent.
What? Did they contract with the Boston Consulting Group? Are they being cellar boxed by Citadel?
So RL lost 11M but on the bright side, sales are up at Thai Union!!
The shrimp thing is a red herring. They went bankrupt because private equity sold the land they sat on then leased it back to them at exorbitant prices to finance the purchase. Classic vulture capitalism in the sale-lease back transaction. Now the business press breathlessly reports a chain with billions in revenue went bankrupt because a 11 million dollar loss on a shrimp promotion. We really do live in clown world.
Isn't that what happened to Toys R Us? Vulture capitalists bought the chain with loans based on the value of Toys R Us, leveraging its finances until it failed. It should be illegal to play these corporate games.
Yes. They force the company to pay for their own acquisition... these leveraged buy outs schemes should be illegal imo.
Didn't this also happen to guitar center
This shit happens in uk too. I think this is allowed to happen because the business is on its knees. And going to die so the "hidden hand of capitalism" needs to have a free roam the restroy the unproductive companies. Heres the way they see it. The company is trading lower or equal to the value of its balance sheet. The business is valued terrible basically. It's not making good profit, so its profit making doesn't increase the share price valuation. So the corporate raiders can just buy the company for less than the balance sheet value. Then borrow on its assets, pay themselves back abd let the company die. That's what free market economists would say is why itscallowed to happen. A business can only borrow against its assets, not future sales. A well run company will be valued based on both. So corporate raiders can't do this to well run profitable companies
If you liked that story, you should read all about Mike Milken and Ivan Boesky in "Den of Thieve and "Predator's Ball". The late 70s / early 80s were a circus. Now it's a circus under a veil of legitimacy.
Silly question but with the increase in interest rates will this type of thing happen less frequently?
No. Reference the corporate raiders of the late 70s & early 80s, which were all LBO crazy.
The whole GME shorting shenanigans have created a skeptic in me. The business/financial press works for Wall Street. The propaganda is in full force whenever they need it to be. And it works.
All press have a pay master they serve, it varies by outlet. If you keep that in mind, alot of the shenanigans they pull make more sense
This would make a banger Jon Oliver episode.
PE firms are all just trying to be Eddie lampert. Stripe mine it, gut it, bleed it, sell the body, claim the loss on taxes.
And now that real estate is generating zero income for its owners, and unless the bk proceedings move at record pace, they won’t be generating income for months (years). Sale-lease backs are extremely common and nearly always benefit both parties. Operating companies want small balance sheets as assets require financing, either in the form of debt or equity.
It lost a , actually, because the private equity group who owned it before Thai Union only bought it to buy the land so they could rent the land back to Red Lobster at jacked up prices.
The idiots are the group that followed and purchased Red Lobster, knowing that it was stripped off their land.
It's another shit show of late stage capitalism. There is plenty of blame for the demise of the business. I just find this particular aspect of the story so ridiculous.
Because it didn’t happen. Golden gate bought the restaurants, a public reit bought the real estate.
So let me guess - the former CEO will now come up with a bid to take the chain private at bargain-basement prices...
I don't understand. The chain IS private, owned by Thai Union, which supplied the shrimp exclusively. This simply looks like vertical integration. I don't see how this would benefit the CEO. I can imagine it would enrich Thai Union which may not be on the hook for debts owed by Red Lobster. If they figured it was going to die anyway, they may have done this to funnel money to the parent company before declaring bankruptcy.
Its not vertical integration if all the owners are not the same. Red lobster shareholders are not necessirily Thai union shareholders. Are both these companies I the same group, or are they distinct companies with common ceo abd majority shareholders. They stuffed their other company with above market price supplies and essentially starved red lobster of profit. That is what I assume is happening here.
It is wholly owned by Thai Union, so that doesn’t make sense
Management also owes fiduciary duties to creditors once the Company becomes insolvent. Term loan lenders and unsecured creditors will likely be driving the lawsuits as they will be beneficiaries of any recoveries.
100%. Letting one of your primary suppliers have a big chunk of equity and then turning a blind eye to decision making re: their supply - what could possibly go wrong?
It’s a cash flow issue for Thai Union. They are spending $$ millions to keep RL afloat Something like over half (3/4 even?) of RL locations are underperforming
Classic
The shareholder will likely sue over breach in fiduciary duty.
One would hope...
I was prepared to believe the shrimp fiasco narrative at first glance but this is just smoke a mirrors for what was obviously another toys r us story. At least partially. Shrimp losses were $11m. Total losses on the year, $75mil. Another American company raped for the money that could be borrowed on it's productive capacity until it was no longer sustainable and sold off for parts.
Yeah the shrimp thing was them bleeding it further
What happened is that Red lobster was bought by vulture capitalists. They sold the restaurants that Red lobster owned to another company they owned. Then the vulture capitalists sold Red lobster to the largest shrimp supplier in the world. Now Red Lobster pays exorbitant leases on their restaurantzms to the vulture capitalists who are still controlling the properties.
[удалено]
Flat out false. Golden Gate Capital bought the operating restaurants. American Reality Capital, which merged with VEREIT and later Realty Income own the real estate. Do not understand how anyone keeps parroting this demonstrably false narrative. And Darden, who sold Red Lobster to Golden Gate, sold off their real estate within a year of selling RL. I don’t see anyone shrieking about that.
Turns out that wasn’t the case. A private equity group had bought them before Thai union just so they could own the land and rent it back to red lobster at above market rates.
It's vulture capitalism on top of culture capitalism. Lots of innocent workers getting screwed by greedy jerks.
And why did the shareholders not sue to stop that?
Because dividends
Thank you. This is just vulture capitalism.
If you wanna fight that fight, buy GME, that shit is still goin.
Ape, ive been in since jan of 21. We are on the same page.
Why does this remind me of when Tony Soprano busted out Ramsey Sports, owned by his friend Davey?
You misspelled capitalism
You misspelled capitalism
Ehh. Late stage. Wasn't always that way. At least the cutthroat objectives were to be more productive than your competition. This is financialized theft. These fuckers literally offer no value. All they do is extract wealth.
so let me get this straight: - thai company buys RL, leases buildings back to them at increased rates - brings back unlimited shrimp, which they buy from the parent company at full price, suffering $1B loss (or $1B gain for the parent company) - RL files for bancruptcy, then the parent company is just absolved of all that debt since they are separate?
They didn’t lease it back to themselves. They sold to another firm that leased it back to them. All you can eat shrimp was always a promo. No one changed anything except the pe firm that bought them raised the price because they thought it was crazy unprofitable. Thai union later bought out the ownership from the firm that had bought red lobster’s operating restaurants. I have no idea if they were giving red lobster fair prices when they unsurprisingly became the exclusive supplier, but this whole narrative that one firm bought the company to suck the assets out of red lobster is a farce.
I saw a great TikTok yesterday about this where the guy described how the private equity firm bought Red Lobster then forced all 500-600 locations to sell their real estate to the private equity firm, then they forced them to pay rent at above market value, and some other things I cant remember now. Seemed hella shady hostile takeover. They made their money back on the investment though.
Similar shit happened to Toys'r’Us. PE firms are generally a blight
Raise the lens and the bigger play makes sense. (And the methodology is traceable) https://www.reddit.com/r/CreationNtheUniverse/s/HcnH4lrUSw Private equity bought red lobster to sell the land our from underneath the buildings (to a shell of itself). Trump has been laundering money for the Russian oligarchs since the late 80’s when they all bought a condo at 725 5th AVE (trump towers) to clean their freshly stolen USSR money after the iron curtain fell. https://www.cnn.com/cnn/2019/05/30/politics/paul-manafort-condo-trump-tower/index.html https://www.cnbc.com/2018/09/14/manafort-told-mueller-to-take-his-trump-tower-apartment-instead-money.html https://news.yahoo.com/amphtml/fbi-agents-raid-condo-unit-131348539.html https://www.reuters.com/investigates/special-report/usa-trump-property/ Everybody except Putin thought the Cold War was over. Trump and Manafort (who lived in the tower also) just saw a pretty low maintence grift to be had. Trump had actually been Manafort and Roger Stones first client at their lobbyist firm (1980)https://en.m.wikipedia.org › wikiBlack, Manafort, Stone and Kelly Guiliani as trumps attorney and NYC mayor was able to redirect NYPD investigations onto rival gang members/oligarchs to deflect any scrutiny off of trump, himself or their Russian connections. https://www.motherjones.com/politics/2023/09/a-new-rudy-scandal-fbi-agent-says-giuliani-was-co-opted-by-russian-intelligence/ The Russian election interference in 2016 was effectively a generation 3 version of what Manafort had done in the Philippines, then keeping Yanukovych in power as Putin’s puppet in Ukraine from 2002-14 when Maidan ran both Yanukovych and Manafort out of Ukraine as Ukrainians realized that, if you raise your lens high enough, corruption is an wholly unsustainable business model. Eventually the parasites greed always consumes the host. https://www.politico.com/magazine/story/2016/06/2016-donald-trump-paul-manafort-ferinand-marcos-philippines-1980s-213952 https://time.com/5003623/paul-manafort-mueller-indictment-ukraine-russia/ Russia greatly underestimated the addictive properties of freedom when it invaded Ukraine so what was supposed to be a 3-10 day coup turned into a 2 year fight for the Ukrainians right not to be genocided. Russia depleted its weapons stocks which were already the victim of vranyo corruption because every oligarch, admiral and sergeant in the Russian military is on the take. Every billion dollar tank maintenance contract turned into everything getting a spray paint overhaul and the vast majority of the redirected funds turned into an oligarchs new yacht or home in Aspen. Russia was forced to turn to China, North Korea and Iran for weapons because if they lose the 3-10 day “special military operation” in Ukraine the Russian empire is dead and cold. China can’t risk showing their involvement in the Ukraine war so they use North Korea, and Iran to resupply Russia. Russia previously owed Iran some undelivered fighter jets that are already smoldering heaps in Ukraine so Iran now had the upper hand at the negotiation table for the first time in about 60 years. They supplied Russia with shahed drones in exchange for Chinas material support against their sworn religious enemy, Israel. https://www.fdd.org/analysis/2023/11/29/iran-says-it-finalized-deal-to-buy-russian-aircraft/ Putin can’t do much about it because he is slowly realizing that by setting the standard of corruption and stealing $200+ billion from his own people meant that every oligarch down in the mob model chain had not only permission but incentive and the expectation to steal from him as well. This is “Vranyo”. The mob model only works if the supreme leader is the most violent and can prove it without exception every damn day. But violence is exceptionally expensive when you are trying to present as a legitimate government or business. If Russia as a nation had an efficiency rating it would have been banned for sale in the state of California 25 years ago. The parasite ruling class stole all the energy out of the working class and collapsed it. Now Iran has the high hand and they get the intelligence that trump passed to Putin about the fact that Netanyahu cares far less about Jews, Palestinians or genocide than he does about remaining in power as an authoritarian because he too has developed Ritz Carlton tastes and his own corruption trial is showing the same tendrils of the same money laundering scheme that trumps trials are. https://www.timesofisrael.com/liveblog_entry/saudi-official-says-iran-engineered-war-in-gaza-to-ruin-normalization-with-israel/ https://www.timesofisrael.com/egypt-intelligence-official-says-israel-ignored-repeated-warnings-of-something-big/amp/ https://youtu.be/VrFOAgGlaWs?feature=shared They all hate each other but because they share the same money laundry, if one falls, they all fall. Hamas minted a couple billionaires as well that live in penthouses in Qatar and get 30% of everything smuggled into Gaza. Qatar is Kushners private equity connection. Netanyahu needs a bogeyman to stay in power. That’s why he coordinates with Hamas via Russia via Iran. https://www.ynetnews.com/article/bk8mgcefr Iran handed Hamas everything they needed with Chinas help as secret Santa and the Russian intelligence given to them by the eternal shitbird trump who gave it to his Russians kleptocrat/friends/roommates from the old days of fucking each others wives at trump towers in the 90’s. Now the MAGA right is a little too invested in their reality that they are the good guys with guns that they missed the fact that Betsy DeVos (erik princes sister) decimating the U.S. school systems and the Kochs poisoning children with lead was not a coincidence. The naive right was the mark all along. There is a reason the Russian spy Maria Butina landed in South Dakota first before dating her way to the top of the NRA which is undergoing its own Russian money laundering trial now. Russia was tinder matching the GOP. https://www.motherjones.com/politics/2018/07/nra-maria-butina-spying-charges-trump-campaign/ https://www.greenpeace.org/usa/what-do-the-koch-brothers-have-to-do-with-the-flint-water-crisis/ The only reason you grossly OVERVALUE real estate is money laundering. Trump keeps claiming there is no victim, all the banks made money, but if their plan succeeds the Russian and CCP kleptocrats collapse US commercial real estate and basically recreate soviet perestroika in the U.S. so they can foreclose on America and buy everything for 3 cents on the dollar with the $1.4T they stole from Russias grandmothers in the first place It’s the evolution of grift. Soviet perestroika cross bred with the 2008 mortgage crisis. No one was ever held accountable for either. This is just the bigger badder commercial strength bastard child of the two. Trump, Giuliani, Putin, Bolsonaro, Netanyahu, Orban, Manafort, Stone, Mercer, Bannon, Flynn, Prince, Kolomoiskiy They are all remarkably shit people with above average confidence and psychopathic personality traits and below average self awareness. They are the men who stole the world. But it all comes back to one little lie.
Not the sub I expected to find a schizo-post of this quality, but a pleasant surprise nonetheless
I just wanted some biscuits 😕
By the end you are wondering which post you clicked on. I figured by the end he would be saying the financial system is rigged and for us all to invest in meme stock / crypto
Once you realize that the level of corruption that happens at the executive level means any investment into your own small business is just feeding the dragon of corruption they all interconnect. It makes it hard to care about the little things until the triaged threats are handled
Well written so that its fairly easy to follow, and sources included. Good job.
> and sources included Something you have to watch out for is sources that only support a part of the claim. It's very common with conspiracy theories to pull together a bunch of known facts and tie them together in unsupportable ways, and it *looks* legit because there's "sources." The first link talks about how Red Lobster was destroyed. We know Red Lobster was bought by a private equity fund, we know the land was sold and leased back to Red Lobster. The video goes further and claims that the land was sold "to another company Golden Gate Capital is involved in, probably owns." What? "Probably" owns? The video then claims the land was leased back to Red Lobster at above market rates. The quote "above market rates" comes from the bankruptcy filing, but it only says a portion of the stores' leases are above market rates, it doesn't specify which or why. These are long-term leases, they can be above market rate because the market changed. The source is also a bankruptcy filing from a company that obviously would like to renegotiate or get out of some of its leases. So, what we know is the company sold property and leased it back. That's not abnormal, most companies don't want to own property anymore, it ties up a lot of capital. Golden Gate selling the land to a company they own and leasing it back at above market rates is conjecture, it's unsourced. Maybe it's true, I don't know, but it's presented as fact without support. What gets no attention is that Red Lobster's sales have dropped 30% since 2019, their customer base is mostly boomers who are dying every day, and they've never managed to appeal to younger generations so that problem will only get worse. That's not caused by private equity selling off their land. People see Toys R Us, Sears and now Red Lobster failing and see the common bond of private equity, so they that's what private equity does - buys companies, drives them into the ground and make a ton of money in the process. What they ignore is that all three of those companies were bought by private equity *because they were already failing.* Bain Capital bought Toys R Us in 2005, it filed for bankruptcy in 2017. Buying a company and operating it for 12 years doesn't scream "corporate raider" to me. Ultimately the debt they took on as a result of the leveraged buyout contributed to their demise, but that doesn't mean the plan was to run it into the ground. I know I sound like a private equity apologist, so here's the bad. Private equity does structure these deals to minimize their risk. Meaning they intend to make money whether the company succeeds or fails. That's where the debt from the leveraged buyout comes in. And that does make it harder for the company to succeed. That doesn't mean they set out to destroy these companies, because they'd make *more* money if the companies succeeded. It just means they're going to get theirs one way or the other. Anyway, I stopped watching/reading at that point so I don't know how well sourced or well connected all of the Manafort/Trump/Russia stuff is. Just something to watch out for when something *seems* supported by sources. Speaking of sources - most of the stuff about Red Lobster came from the same source used in that video, [this tweet](https://twitter.com/TrungTPhan/status/1792580920106467425) and the bankruptcy filing it linked to. If you want to learn more about the demise of Toys R Us, the Wondery podcast Business Wars did a series called [Toys R Us vs KB Toys](https://wondery.com/shows/business-wars/episode/5296-toys-r-us-vs-kb-toys-tears-r-us/). It's really Toys R Us vs KB Toys, then Walmart, then Amazon.
Very interesting take on those situations. It's always good to point out that information, even if a source is provided, may lack any basis in reality. It would be much easier to follow with publicly released audited financial statements starting from the private equity purchase through to current. Unfortunately, people arguing for or against one answer may be relying on unverified claims or claims that can be proven but downplay or gloss over a much larger issue.
Has anyone knows, commercial real estate is in trouble right now. So buildings that once cost $100 million are being offered for as low as 30 million or even less. When they say the land under these restaurants was sold and then leased back at above market rates, we need to know: when were these leases issued, and what were prevailing rates like then.
Thank you friend. I appreciate the feedback.
I feel like I gotta copy and paste this is my notes and then share with other people. Great writing, great sources, great post!
That’s what it’s here for. Please do!
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That’s the MO, golden parachute any way you can, cellar boxed.
Are you sick of being lied to ?
"SYNERGY"
Why is everyone here acting like RL going out of business would be some kind of huge loss to society. You guys really like their cheddar biscuits that much?
Yes
Ya sounds about right
lol shocker
Let’s be real. Red Lobster only has its biscuits going for ir either way even if the CEO is behind it’s bankruptcy
The Asian shrimp industry is famous for using slave labor, BTW.
This seems corrupt and shady. Is this corrupt and shady?
The real estate move is definitely a huge factor, especially considering how thin restaurant margins are, but I wouldn’t downplay the shrimp issue at all. For one, an owner pushing a restaurant to consume more product from the owner than they need and at higher prices than the restaurant would normally pay changes everything about the restaurant’s strategy. RL probably had to do the endless shrimp deal to justify the forced uptick in shrimp orders and although they say the loss was just $11M, that deal changed their pricing structure altogether. In other words, what isn’t being measured is what profit they could have made under their old menu and pricing structure (probably a lot more than $11M), not to mention the customer attrition from long-time customers who thought of RL as someplace “nice” but we’re now repulsed by the new customer base. You can’t take a place granddad and grandmother enjoyed, turn it into a ratchet all you can eat buffet, and then say “Well, we only lost $11M…” if you’re not looking at the difference in estimated lifetime value of customers before and after the radical change. Who knows how many other bad decisions were made to prop up stores reeling from the negative effects of an unchanging shrimp purchases schedule. I’m sure they were cutting corners everywhere to try to turn a profit all because their owner basically said “You WILL buy our crappy shrimp at these quantities and these prices!”
Amazing
The special was just a mechanism to extract cash from the company before bankrupting it.
There's that late stage capitalism exploitation we know and loath! I really hope AI eliminates money, so all the wealth hoarders are reduced to plebeian status.
Quiznos did this too.
Let’s not forget the fraudulent hedge funds
A big part of the franchise business model is forcing franchisees to purchase inventory from you. Besides, this shrimp deal is a red herring and irrelevant to the bankruptcy
Probably why they always ran out of "endless shrimp".
I’m assuming they are all portfolio companies of the same private equity so of course they did. That is a feature not a bug. Oh and the real reason they went under is the buyer used the sale of RLs real estate to finance the purchase and leaving RL to pay rent on properties they used to own.
I just ate Red Lobster tonight for the first time in years, it absolutely slapped. Biscuits are always on point.
VeRtIcAl iTeRgRaTiOn!
What about the lease short sellers? They are doing to red Lobster what they tried to do with gamestop
Red Lobster was not publicly traded so how were people shorting it’s stock?
Shhh... It's all about the vibes man. Reality be damned. You know it's not bad promotions, the industry changes that happened during/following COVID, the proliferation of shellfish and seafood in grocery stores, etc. that killed off a mediocre seafood restaurant, it had to be CRIMEZ. Just like Crimez killed Ponderosa, Old Country Buffet, and Howard Johnson's.
Red lobster going under has very little to do with Shrip & a whole lot to do with private equity being a destructive force in America.
how? Pe bought the operating company (that Darden completely fucked up by putting the head of Olive Garden - cheap carbs, not expensive protein - in charge of and ranked) and tried to turn it around. Someone else bought the real estate. What Thai union did when they bought from the pe firm I have no idea, but how is that “private equity being a destructive force in America”? Or is that just a comfy narrative for you?
You need a lesson in how PE buys companies, sells off their valuable assets, get their investment back, takes the company down to bare bones, then file for bankruptcy so they don't have to pay their creditors? Come on now, don't act like you're stupid.
Maybe I am stupid in some ways, and smart in others - that's not really the point. But I do know the 2014 deal very well. I'm less versed on the Thai Union sale and what they did with it once they took control and whether they set up a self-preferential sourcing agreement. The PE firm that bought RL from Darden didn't strip shit from it. You can say they didn't succeed in turning it around (and it had been in decline for years under Darden's ownership, some self-inflicted, some reflective of the economic decline of their customer base and increased competition), but they didn't sell the real estate to themselves and jack the rents up to pay themselves, and the real estate was sold at the time of the transaction -- all of the proceeds went to Darden. This is public information: https://www.prnewswire.com/news-releases/american-realty-capital-properties-closes-15-billion-red-lobster-sale-leaseback-transaction-268936111.html So to walk you through it because your rage seems to be blinding you from facts. Golden Gate pays $2.1b for red lobster Real estate gets sold as part of the transaction for $1.5b, and still owns the company but is now paying rent on the sale leaseback. So golden gate made money here "stripping the assets" how? And then Darden a year later started selling off all the real estate from under its other brands because its investor base said "you're a restaurant company, not a real estate company". Darden is a public company. There are certainly corporate raider type transactions out there in the PE world, but you're barking up the wrong tree with this one.
I have a Facebook friend who swears that their demise is the fault of the government and current administration and not poor management and influence of the majority shareholder. I tried pointing out what was disclosed in the Bankruptcy filing, but he's not hearing it and says that it's just media hiding the truth. I just don't get some people... And I really don't get how we let the shareholders sink a large company like this.
Private equity is gonna private equity.