MELVILLE, N.Y. — Pizza and pasta chain Sbarro Inc. said yesterday that it is filing for Chapter 11 bankruptcy protection as it works to restructure.
The restaurant chain has suffered, like many restaurants, since consumers clamped down on spending in the recession. It didn’t help that many of Sbarro’s restaurants are located in retail malls, which shoppers steered clear of during the depths of the economic downturn. Rising food costs, particularly for cheese and flour, have added to its woes of late.
Sbarro is also strapped by debt it took on when private equity firm MidOcean Partners bought it in January 2007.
The bankruptcy filing was expected, as reports emerged last week that the Melville, N.Y., company was considering a prepackaged deal to help it reorganize. Sbarro had total assets of approximately $471 million and about $486.6 million in debt, according to the bankruptcy filing.
Sbarro said it has reached a deal with lenders and noteholders on a reorganization plan that will get rid of about $200 million of its debt, which covers more than half of its total debt.
Sbarro is also seeking approval from the Bankruptcy Court for the Southern District of New York for a $35 million financing agreement with certain existing first-lien lenders.
Sbarro got its start as an Italian grocery in Brooklyn in 1956.