The pizza chain has some $140 million in debt to lenders. According to the Wall Street Journal, the bankruptcy plan would hand over control of the company to the creditors in exchange for wiping away that red ink. The lenders involved in the deal will also provide a $20 million bankruptcy loan to aid in restructuring the chain that has faltered in the face of increased competition and decreased foot traffic to the malls that have called Sbarro home for decades.
Sbarro will also be put on the auction block to see if anyone is willing to buy the beleaguered restaurant chain.
The bankruptcy comes on the heels of a recent announcement to shutter 155 of the remaining 400 Sbarro locations in North America. There are another 600 Sbarro locations outside of North America that are unaffected by this filing.
The company filed for bankruptcy in 2011 and was able to substantially reduce its debt from $400 million to its current level.