Seafood restaurant chain Red Lobster is mulling a Chapter 11 bankruptcy filing as it looks to restructure its debt, according to people with knowledge of the matter.

Red Lobster has been getting advice from law firm King & Spalding, said the people, who asked not to be identified discussing a private matter. The dining chain is considering a possible Chapter 11 filing to shed some long-term contracts and renegotiate a swath of leases, the people said.

Red Lobster’s cash flows have been weighed down by onerous leases and labour costs, among other issues. Restructuring discussions are ongoing and a final decision hasn’t been made, they said. Filing for bankruptcy would allow the company to keep operating while it works on a debt-cutting plan.

Messages left with Red Lobster and King & Spalding were not returned.

Red Lobster traces its roots to a single restaurant in Lakeland, Florida in 1968, according to its website. The company introduced its popular cheese-flavoured biscuits in 1992, and Red Lobster now boasts hundreds of locations across the US and Canada, along with international franchises.

The restaurant chain has gone through multiple owners and management changes in recent years. Thai Union Group Plc, which took control of the company in 2021, this year wrote down its stake in Red Lobster and said the company’s “ongoing financial requirements no longer align with Thai Union’s capital allocation priorities.”

Fortress Investment Group is a key lender to Red Lobster and is among those involved in current debt negotiations, the people said.

A representative with Fortress declined to comment.

Golden Gate Capital took over Orlando, Florida-based Red Lobster from Darden Restaurants through a leveraged buyout in 2014. Thai Union owned 25% of the chain before buying Golden Gate’s stake in 2021.