Seafood giant is accused of scheme in Red Lobster bankruptcy

By the Editorial Team · Saturday, June 27, 2026

A lawsuit alleges that Thai Union Group manipulated shrimp purchasing at Red Lobster, forcing the chain into costly contracts that contributed to its 2024 bankruptcy. The case highlights how Thai Union’s control led to financial losses from a permanent shrimp promotion and restrictive supply deals, prompting creditors to seek damages and reversal of certain transactions.

A newly filed lawsuit accuses seafood conglomerate Thai Union Group Pcl of orchestrating a scheme that contributed to the bankruptcy of Red Lobster, the iconic American restaurant chain, by pressing the business into purchasing shrimp on unfavorable terms. The suit, brought on behalf of creditors owed approximately $295 million at the time of Red Lobster’s 2024 bankruptcy filing, alleges that Thai Union prioritized extracting value for itself at the expense of Red Lobster’s financial health.

According to the complaint, Thai Union leveraged its majority ownership—acquired after leading a buyout of Red Lobster in 2020—to dictate shrimp purchasing decisions, pushing the chain to buy increasing quantities of shrimp exclusively from Thai Union at above-market prices. This shift undermined Red Lobster’s longstanding procurement policies, which favored multiple suppliers, and resulted in higher costs that compounded the chain’s mounting losses. The lawsuit contends that these actions turned a previously successful shrimp promotion into a financial disaster.

The dispute details how, in 2022, Thai Union installed Paul Kenny, a restaurant executive and company shareholder, as interim CEO following the resignation of Red Lobster’s then-CEO Kelli Valade, who reportedly stepped down due to Kenny’s interference. Kenny’s tenure, supported by Scott Solar as his aide, was marked by direct involvement in supplier contract awards, including the controversial decision to ban a longtime shrimp supplier, effectively cementing Thai Union’s position as sole shrimp provider.

In May 2023, under Kenny’s direction, Red Lobster made its annual “Ultimate Endless Shrimp” promotion permanent and expanded it to include premium shrimp varieties. While the offer attracted customer interest, the lawsuit argues it led to supply shortages and diminished revenue by diverting diners from higher-profit menu items. This promotion, the suit states, incurred substantial losses and burdened the restaurant with restrictive supply obligations linked to Thai Union’s shrimp.

Financial strain intensified, culminating in Red Lobster’s default on a loan from Fortress Investment Group, which subsequently gained control of the chain’s board. Thai Union announced plans to divest from Red Lobster in early 2024. Red Lobster ultimately filed for bankruptcy in May 2024 and is now owned by an investment group led by Fortress.

Thai Union has denied any wrongdoing in relation to the allegations and declined to comment on the ongoing litigation. Red Lobster also did not respond to requests for comment, and Fortress Investment Group refrained from discussing the case.

The creditor trust filing the suit seeks damages and aims to reverse roughly $32 million in transactions it claims Thai Union compelled Red Lobster to enter in 2023. Many claims mirror earlier assertions made by former Red Lobster CEO Jonathan Tibus, who led the company’s turnaround effort after bankruptcy and attributed significant financial losses to the shrimp promotion and supply commitments with Thai Union.

Red Lobster has since resumed limited-time shrimp offers under new management, now sourcing shrimp from a different group of suppliers as part of its ongoing efforts to stabilize operations under CEO Damola Adamolekun.

This article was reported by synthesizing coverage from multiple independent news outlets to present a balanced, unbiased account. Read about our editorial standards. Spotted an error? Let us know.