The Pizza company Sbarro has filed its second bankruptcy in the last three years. It is choosing to file under Chapter 11 of the bankruptcy code which allows businesses to restructure their debt. Had the company gone a Chapter 7 route, the entire company would be liquidated.
It will be the job of the bankruptcy lawyers to set forth a reorganization plan for the bankruptcy. This is similar to consumer bankruptcy lawyers proposing a Chapter 13 repayment on behalf of their clients in order to reorganize and restructure the debt.
Sbarro’s successes and failures tie directly to foot traffic in mall food courts. As the number of mall patrons falls, individual stores lose business. As internet shopping increases, mall traffic will fall. At the same time, malls try to make up for lost revenues when stores leave by raising rent for new leases. Sbarro’s failures in recent years can be blamed on less foot traffic and higher costs.
The company is looking to extend itself to a brighter future through reorganization. Good bankruptcy lawyers can explain how your finances will also benefit from a bankruptcy filing if debt has stifled you.
NEW YORK – Sbarro said Monday that it is filing for bankruptcy reorganization, the struggling pizza chain’s second trip through bankruptcy court in less than three years.
The filing comes after the company last month announced it would be close 155 of its 400 North American stores, most of which are located in malls and airports.
The company did not immediately provide details on whether any marketing or in-store changes were planned to help update its image and boost sales. It says it still has more than 800 locations worldwide.
Sbarro also filed for bankruptcy protection in April 2011 and emerged a few months later, saying that it significantly cut its debt and received a capital infusion. A new CEO then led a push to revitalize the chain’s image by touting new recipes and ovens. But the efforts apparently didn’t take hold.
Sbarro, based in Melville, N.Y., says its strategy of store closings and balance sheet restructuring will improve its profitability and reduce outstanding debt by more than 80 percent. It said its filing is designed to “allow for a quick exit from bankruptcy” as it executes a broader plan developed by the new management team.
CBS News: http://www.cbsnews.com/news/sbarro-goes-bankrupt-for-second-time/
