One of the most popular pizza and sub chains filed for bankruptcy earlier this year. The Sbarro family started the business in Brooklyn, NY as an Italian grocery store in 1956 and eventually grew to open stores nationwide. After rising food costs and recession reduced sales, this 50+ year old business took a huge hit to profitability. Looking to remain in operation, Sbarro filed for Chapter 11 debt reorganization hoping for a chance and getting caught up on their debts.
New Plan For Profitability
The original bankruptcy plan filed earlier this year included details about debt reduction strategies and methods for obtaining new capital. Sbarro originally planned to exit bankruptcy protection by the end of the year, but has now changed the plan to amend the conditions.
The new restructuring plan includes $35 million in new capital from existing lenders. The $100 million owed to creditors will be converted into equity in the newly reorganized company and held in a securities trust. Sbarro is also hoping for a bailout from a foreign investor that will help alleviate their debt load and generate positive cash flow.