Sbarro Pizza Chain Files Bankruptcy Reorganization Plan
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Sbarro Pizza Chain Files Bankruptcy Reorganization Plan

August 10, 2011


After months of strategizing over ways to exit bankruptcy, pizza chain Sbarro, Inc. announced Wednesday that it has filed a reorganization plan with the U.S. Bankruptcy Court for the Southern District of New York.

The plan is designed to reduce the company’s debt by approximately 73%, from near $405 million to $110 million.

Highlights from the plan include:

  • Converting the company’s funding during bankruptcy into a newly issued $110 million loan;
  • Converting approximately $173 million in priority debt into part of an exit term loan and 100% of the company’s equity; and
  • Eliminating all other outstanding debt.

“The plan gives us a clear path to emerge from the bankruptcy process with significantly reduced debt and increased financial flexibility and liquidity,” said Interim President and CEO Nicholas McGrane in a statement Wednesday.

Following the company’s emergence from Chapter 11, Sbarro’s prepetition first lien lenders will own almost all of its equity. Some of those lenders have committed to provide Sbarro with an $18.6 million new term loan facility to be used as working capital when the company emerges from bankruptcy.

Sbarro filed for Chapter 11 protection on April 4, 2011, after facing troubles caused by the economic downturn. The pizza chain closed more than 150 restaurants in the last two years.

The case is currently pending before the Honorable Shelley C. Chapman, and a hearing will be held to consider approval of the reorganization plan September 7, 2011.

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