Sbarro LLC is a pizza chain frequently seen in malls and food courts, but the chain made a bold move this past Monday when they decided to file for bankruptcy protection. This is the second time that Sbarro has filed for bankruptcy protection within the past three years. According to a U.S. Bankruptcy Court in Manhattan, Sbarro and more than 30 affiliates filed for Chapter 11 protection from creditors in order to reorganize finances without constant contact. The New York-based pizza company has between $100 million and $500 million in assets and liabilities, according to court papers. Sbarro said last month that it intended to close 155 of their 400 restaurants in North American in hopes of cutting costs.

The Bankruptcy filing says that the company will shed $140 million of secured debt during reorganization with the help of skilled advisers Moelis & Co. and Loughlin Management. Sbarro filed for bankruptcy protection back in April of 2011 as well, and emerged from protection in November of that year. A Chief Executive at the company says that the board and senior management are committed to Sbarro's future growth and success and the filing is a necessary step to get there.

The chief executive of the pizza chain was formerly the president of the hamburger chain Wendy's. He moved to Sbarro to try and help the pizza chain survive the sharp incline that they need to scale to get back on top financially. The president says that he believes Sbarro may not have a sustainable business over the longer time. The best way to turn the company around, he reasons, is to get out of money-losing leases by closing stores all throughout the United States.

Sbarro was founded by a married couple who emigrated from Naples, Italy. The first storefront was opened in Naples, where its popularity allowed the chain to expand throughout New York City before launching in 1967 with its typical restaurant format. Currently, Sbarro has 799 restaurants operating in more than 40 countries and employing more than 2,700 people. Sbarro says that the bankruptcy will not affect all franchise restaurants. The company plans to close 155 of the company-owned restaurants throughout the U.S.

Sbarro's Chapter 11 bankruptcy has been termed a "pre-packaged" deal. The bankruptcy intends to help Sbarro make a quick exit from bankruptcy before May 7 with less liability. Sbarro hopes that during the bankruptcy the can cut the debt load by more than 80%. The company says that nearly all of their lenders support the restructuring which requires court approval. The company will invite other buyers to submit better offers during the bankruptcy.

Sbarro allegedly tried to boost sales with revamping recipes to appeal to the hybrid fast food chain diners that are currently pouring money into chains like Chipotle, Panera Bread, and Corner Bakery. Unfortunately, a decline in mall traffic due to the economy and the fact that the food is pre-made and often sits under heaters for a while has led to a decline in sales nationwide. The company's owner says that many people want food made to order, not pre-made pizzas.

The Chief Financial Officer for the company says that Sbarro has been struck with an outdated business model and needs to reconstruct their business to aid the desires of the day. If you are currently running a business that is in debt, you may want to consider filing a Chapter 11 bankruptcy as well. This can help you to avoid penalties and payments while restructuring your company so that you can eventually make the business flourish. Talk with a skilled and reliable attorney at a local bankruptcy firm today to learn more!