Sbarro Preparing to File for Bankruptcy Protection Pizza Chain Continues to Struggle With Flagging Sales
By
Emily Glazer
connect
March 5, 2014 8:19 p.m. ET
Sbarro is preparing to file for bankruptcy protection. Parker Eshelman/The Wall Street
Sbarro LLC is preparing to file for bankruptcy protection as soon as next week as it continues to struggle with flagging sales after an earlier Chapter 11 restructuring, people familiar with the matter said.
The pizza chain is soliciting votes due by the end of this week for a so-called prepackaged restructuring plan that could streamline its trip through bankruptcy court, these people said. If it gets enough votes, Sbarro could file for Chapter 11 protection as early as Sunday, they said.
A Sbarro spokesman declined to comment on a potential Chapter 11 filing but said the company's new management team and advisers have been "thoroughly evaluating the business" over the past nine months.
"We are making significant progress," he said.
Closely held Sbarro, which carries about $140 million in debt, said in mid-February it was closing 155 of the 400 restaurants it owns in North America to cut costs. The majority of its U.S. restaurants are located in airports and mall food courts.
The Melville, N.Y., company emerged from Chapter 11 protection more than two years ago. The company initially found success with its mall-based locations, but it took a hit during the U.S. economic downturn as mall traffic fell.
Sbarro also struggled after taking on debt as part of a 2007 buyout by investment firm MidOcean Partners. It closed more than 150 restaurants in the two years before its April 2011 bankruptcy filing. MidOcean didn't retain ownership following Sbarro's bankruptcy exit in late 2011.
Following the closures, there will be more than 800 Sbarro restaurants world-wide, including those owned by the company and by franchisees.
Sbarro, which also offers salads, pastas and other food, has been trying to open more stand-alone restaurants and revamp its recipes to use fresher ingredients.
—Julie Jargon contributed to this article.
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