As Red Lobster’s new owners prepare to take the reins, the embattled seafood chain has revealed that it may owe its parent company, Thai Union Group, USD 20.6 million for millions of pounds of shrimp. The dispute has raised concerns about the financial stability of the company and its ability to continue operating.

A Whopping USD 20.6 Million Bill

According to a document filed with the bankruptcy court, Red Lobster purchased 3.75 million pounds of shrimp from Thai Union, valued at approximately USD 20.6 million. This amount includes the value of the inventory itself, as well as costs associated with additional ingredients, packaging, storage, and interest that is still accruing on Red Lobster’s balance.

Thai Union claims that Red Lobster repeatedly increased its forecasted demand for shrimp in 2023 to keep up with its popular unlimited shrimp promotion. However, demand changed dramatically in October when Red Lobster reduced its forecast multiple times. This led to an oversupply of approximately 5,850,000 pounds of pre-breaded coconut and 21/23 pre-breaded large shrimp, as well as 1.6 million pounds of Calabash shrimp.

Dispute Over Debt

Thai Union is claiming that it is owed approximately USD 3,684,541 in related costs, including ingredients, packaging, storage, and interest. However, Red Lobster’s debtors have filed a claim stating that they owe USD 0, citing a joint supply agreement entered into in 2019. The dispute will be resolved at a court hearing in August.

Experts and executives at Thai Union have acknowledged that Red Lobster’s unlimited shrimp deal was a miscalculation that led to financial insolvency. The company’s CEO stated that he will never eat lobster again due to the bankruptcy.

With millions of pounds of unsold shrimp on its hands, Thai Union is looking to free itself from the financial anchor that is Red Lobster. The company wrote off USD 500 million in losses as it looks to move forward.