NEW YORK (The Deal) -- Pizza chain Sbarro has ordered up another slice of Chapter 11 with a prepackaged reorganization plan supported by lenders holding 98% of its debt.
The Melville, N.Y., company filed a petition on Monday, March 10, in the U.S. Bankruptcy Court for the Southern District of New York in Manhattan. Judge Martin Glenn is assigned to the case.
Sbarro, which restructured in the same court in 2011, in a Monday statement said the supporting lenders would provide $20 million in debtor-in-possession financing that would convert to exit financing. The plan would eliminate the company's $140 million in outstanding secured debt, and "priority lenders" would receive substantially all of the reorganized company's equity. Overall, the plan would eliminate more than 80% of the company's outstanding debt, "resulting in a much stronger organization."
"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," CEO David Karam said in the release. "The board and senior management team are committed to ensuring Sbarro's future growth and success, and today's filing is a necessary step to achieve those goals."
The Deal Pipeline reported in February that the company was closing 155 of its company-owned North American eateries. The company has 800 remaining locations, consisting of 250 company-owned stores in the U.S.; 175 franchised locations in the U.S. and Canada; and more than 400 franchised locations overseas. The company said it opened 81 new stores in 2013.
Sbarro spokesman Jonathan Dedmon of Dilenschneider Group Inc. could not say whether the prepackaged plan had been filed with the court.