Sbarro has filed for bankruptcy protection for the second time in three years due to changing consumer tastes and climbing debt.
A “pre-packaged” reorganization will allow lenders to take over the company, allowing it a “quick exit” from Chapter 11. Sbarro is cutting its debt load by more than 80% with the help of lenders, eliminating about $140 million of secure debt.
Part of the chain’s recent struggles have to do with its outdated business model that sells food that has already been prepared. Many consumers are looking for made-to-order meals when going to fast casual restaurants.
Last month, Sbarro said it will shut down 155 of its 400 North American restaurants. The company has between $100 million and $500 million of both assets and liabilities, according to its bankruptcy petition.
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