Restaurant chain Red Lobster is reportedly mulling a Chapter 11 bankruptcy filing to address its financial woes, particularly concerning leases and labor costs.

According to people familiar with the matter, Red Lobster has enlisted King & Spalding law firm for counsel on potential restructuring options. The company is said to be considering a Chapter 11 filing to relieve itself of onerous long-term contracts and renegotiate leases.

Red Lobster has been struggling with cash flow issues exacerbated by high lease obligations and labor expenses, among other factors. Discussions regarding restructuring are ongoing, and no final decision has been made. Pursuing bankruptcy protection would allow the company to continue operating while it works on a plan to reduce its debt.

Attempts to reach Red Lobster and King & Spalding for comment were unsuccessful.

Founded in 1968 and based in Lakeland, Florida, Red Lobster has grown to encompass numerous locations across the United States, Canada, and international markets. Known for its cheesy biscuits introduced in 1992, the chain has become a mainstay in the casual dining scene.

Recent years have seen Red Lobster undergo changes in ownership and management. Thai Union Group Plc, which took control in 2021, recently marked down its stake in the company, citing a misalignment between Red Lobster’s capital needs and Thai Union’s investment priorities.

Fortress Investment Group, a major lender to Red Lobster, is said to be involved in ongoing discussions about the restaurant chain’s debt. However, a Fortress representative declined to comment.

Red Lobster, headquartered in Orlando, was acquired by Golden Gate Capital in 2014 in a leveraged buyout from Darden Restaurants. Thai Union previously owned a 25% stake in the chain before buying out Golden Gate’s share in 2021.