Joel R. Glucksman
Partner
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The popular Sbarro pizza chain is officially out of bankruptcy after filing for protection under Chapter 11 of the bankruptcy law last March, according to NBC News.
A judge approved the company’s reorganization plan May 19, to take effect June 2, according to the news source. Sbarro has said that it will move its company headquarters to Columbus, Ohio, in order to reduce expenses. The move will also allow it to be closer to its new Pizza Cucinova business, which will let people build their own pizzas. Sbarro will also be cutting approximately 40 jobs at its old headquarters in Melville, New York, but its other 2,700 employees nationwide will be able to keep their jobs.
According to the Wall Street Journal, Sbarro’s restructuring plan will allow lenders to exchange $148 million in debt for control of the new business. The new owners include investors Apollo Global Management, Babson Capital Management LLC and Guggenheim Investment Management LLC. Throughout the case, Sbarro looked for buyers who would make a better offer than the debt-for-equity deal offered by the company’s lenders. Unfortunately for the chain, no prospective bidders came forward, and Sbarro said that it would continue with the original restructuring plan.
In its Chapter 11 filing, Sbarro attributed its financial troubles to an “unprecedented decline in mall traffic,” according to the Journal. It closed about 180 of its 400 restaurants in North America ahead of the filing – a move that enables it to save approximately $82 million per year. Sbarro lawyer David Meyer told Judge Martin Glen that the plan achieves its goals “to deleverage the company’s capital structure, streamline operations, maximize value for all stakeholders … (and) best position the company to compete in the evolving quick-service restaurant industry.”
Unsecured creditors, like food suppliers and landlords, will have approximately $1.25 million to share under the plan, according to the news source.
If you have any questions about this post or would like to discuss your company’s creditors’ rights and bankruptcy matters , please contact me, Joel R. Glucksman at ScarinciHollenbeck.com.
- Practices: Corporate Transactions & Business, Bankruptcy & Creditors' Rights, Bankruptcy Litigation
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