Fast Food Chain Found in Many San Diego Area Malls Files Chapter 11 Bankruptcy – San Diego Bankruptcy Attorney
One of the most popular pizza chains found in malls across San Diego, and the whole country, filed for Chapter 11 bankruptcy on April 4, 2011. Sbarro, a private-equity-owed pizza chain hit hard by rising food costs and the overall economic crisis, filed its case in the Bankruptcy Court for the Southern District of New York.
The Sbarro family began the business in 1956 after emigrating from Italy. Today the pizza chain has over 1,000 locations in forty two countries. According to its bankruptcy filing, Sbarro’s largest unsecured creditor is Bank of America, with a scheduled claim of $150 million. The next largest unsecured creditor is Vistar Distribution Centers, owed about $2.4 million.
The filing also states that the company has about $471 million in assets and $487 million in liabilities. It intends to restructure under Chapter 11 with the plan to reduce its debt by roughly $195 million. The company also hopes that debtor-in-possession financing of $35 million will help the company through the reorganization process.
While Sbarro pursues a plan of reorganization, it has also recently held discussions to with a potential bidder in order to sell the company, instead of pursuing that reorganization plan. The company ended its equity commitment with Areas Corporate Opportunity Fund II LLP and MidOcean Partners and has held private discussions with the unnamed bidder. While the details of those discussions have been private, it has been said that the sale may be worth more than a proposed plan. Only time will tell whether the sale is successful. In the interim however, Sbarro seems to be keeping its options open.
Sbarro has said that it will continue its operations and that customers would still be able to use gift cards and coupons.