Sbarro Files Second Bankruptcy as Mall Traffic Dwindles - Information portal

Sbarro Files Second Bankruptcy as Mall Traffic Dwindles

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11.03.2014 Количество просмотров 410 views
Sbarro Files Second Bankruptcy as Mall Traffic DwindlesSbarro LLC, the 800-restaurant U.S. pizza chain, filed for bankruptcy protection for the second time in three years as customer traffic slowed in the shopping-mall food courts where many of its stores do business.

The company listed assets of $175.4 million and liabilities of $165.2 million in a Chapter 11 petition filed today in U.S. Bankruptcy Court in Manhattan. Melville, New York-based Sbarro said in a statement that it will use court protection to quickly reorganize under a plan already supported by holders of most of its debt, while also shopping around for better offers.

While Sbarro’s units have “a worldwide brand and potential for future growth, their existing capital structure is unsustainable and their operational and financial performance has fallen significantly short of expectations due to an unprecedented decline in mall traffic that continues to hamper retailers and restaurant operators,” Chief Financial Officer Carolyn Spatafora said in court papers.

The Sbarro family started the company 58 years ago after moving to Brooklyn, New York, from Naples, Italy. MidOcean Partners LP acquired Sbarro in January 2007 for $417 million. The chain reported losses in 2008 on higher costs for ingredients and filed for bankruptcy in 2011.

The current proposed reorganization plan is already supported by lenders holding most of its debt. Under that plan, which will eliminate $140 million in debt, secured lenders would offer to trade in $35 million of their pre-bankruptcy debt for the company’s assets, according to court papers. A $20 million operating loan, along with the $35 million “credit-bid,” would be used to fund the company’s exit from bankruptcy.

Sbarro will also market itself for higher offers to ensure it has the best deal for stakeholders, the company said. The company hopes to have a plan confirmed as early as April 22, according to the filing.

“The agreement among the company’s lenders is an indication of the support and confidence they have in the growth strategies developed by the new management team over the past nine months,” Chairman and Chief Executive Officer David Karam said in a statement.

Sbarro said the bankruptcy won’t affect its 600 franchises worldwide, and it doesn’t plan to close more stores after already shuttering 182.
Source:  Bloomberg


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