Sbarro Seeks Bankruptcy Protection
March 14, 2014 | Comments Off on Sbarro Seeks Bankruptcy Protection
Posted by Donald F. Campbell, Jr.
The New York based pizza chain, Sbarro LLC, has filed for bankruptcy protection for the second time in less than three years. Sbarro first filed for bankruptcy in April 2011 and emerged from Chapter 11 the following November. The chain’s financial struggles are attributed to too much debt and a significant decline in mall traffic.
Many of Sbarro’s lenders are in support of the company participating in a prepackaged Chapter 11 reorganization that would allow Sbarro to make a “quick exit” from bankruptcy before May 7. On Wednesday March 12, the court approved a $10 million loan and scheduled an April 25 hearing to review the prepackaged plan. The company is also pursuing an auction process, inviting buyers to submit offers for the business.
Sbarro currently has about 800 restaurants in over 40 countries and employs approximately 2,700 people. In order to cut debt, Sbarro has closed more than 180 locations and expects to close about 50 more. Last month, the company announced plans to close 155 of its 400 company-owned locations in North America. There are approximately 15 Sbarro’s locations in the State of New Jersey. Sbarro’s franchise locations are not affected by the bankruptcy. The restaurant closings, along with the prepackaged reorganization plan, aim to slash 80 percent of the company’s debt.
If you are a landlord and have a lease with Sbarro’s, keep an eye out for any notices from the Bankruptcy Court. Sbarro’s may attempt to terminate or even assign your lease to another tenant even if your lease contains an anti-assignment clause.
The case is In re: Sbarro LLC, US Bankruptcy Court, Southern District of New York, No. 14-10557.
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