Sbarro Pizza Files for Bankruptcy Again

John Mitty Monday, March 10, 2014

Sbarro Pizza, a global pizza chain based in Melville (formerly in Brooklyn) has just filed for Chapter 11 bankruptcy.  The pizza chain has been struggling for a while, and last month, shut down 155 locations throughout the country to try and return to a profitable status.  Unfortunately for Sbarro, this drastic step was not enough.  The chain is currently $500 million in debt.  While its assets also amount to around $500 million according to company accountants, that places the chain right around breakeven. 

Sbarro’s creditors have been swift to support the chain’s decision to file for bankruptcy.  Sbarro also has lenders who are willing to provide them with an additional $20 million.  According to the bankruptcy settlement, the chain will still need to pay off $140 million.  The fact that Sbarro’s creditors are willing to support the move shows that they have confidence in the company and believe that Sbarro can get back on its feet.  If the bankruptcy goes through, around 600 franchise stores around the world will remain open, including 220 locations remaining in the U.S.  This is not the first time that Sbarro has filed for bankruptcy.  In 2011, the struggling pizza chain filed in response to the jump in costs associated with flour, cheese and pasta.  They were able to wipe out 70% of their debt and come out of bankruptcy again later that year.  This indicates that they may very well be able to pull off the same feat again with the help of their creditors and lenders.    

 

 

jmitty@longislandyellowpages.com

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