MELVILLE, N.Y., March 10 (UPI) -- Restaurant chain Sbarro filed for bankruptcy under Chapter 11, citing falling foot traffic in malls that has led to dwindling pizza sales.
The Melville, New York-based company filed for bankruptcy protection along with 30 of its affiliates. The company decided to go ahead with the move after winning support from its lenders for a debt-equity swap that will help the company speed up its recovery through its second bankruptcy in three years.
The company will be provided with $20 million to restructure its balance sheets and will close down 155 of its 400 restaurants. The combination of the two moves is expected to reduce the company's outstanding debt by 80 percent.
Sbarro said they would put the company up for auction to ensure that creditors can maximize their recoveries, but that if they don't receive any better offers they will promptly confirm the stand-alone reorganization.
Sbarro, like its fellow mall chain Hot Dog on a Stick, which filed for bankruptcy last month, has been impacted by lower sales, as customers have stayed away from shopping centers and malls.
Sbarro was founded in 1956 and has more than 800 units worldwide, including franchised locations, with 220 in the U.S.
[The Wall Street Journal]