Sbarro to File for Bankruptcy?
Sbarro, the Italian Pizza Chain popularly known to serve the freshest pizza to mall goers was reportedly preparing to file for bankruptcy following a nine-month-monitoring of the company’s performance.
In a report by Wall Street Journal, the company is soliciting votes due by the end of this week for the Chapter 11 filing that will serve as protection from creditors as it restructures while struggling with demand and debt costs. Sbarro could file the Chapter 11 protection as early as Sunday this week.
A company representative, on the other hand, denied this issue noting that the company have made a progress.
“During the past nine months, our new management team and its advisers have been thoroughly evaluating our business,” Jonathan Dedmon said in an interview with Bloomberg. “We are making a significant progress. Sbarro continues to be a strong brand with bright future.”
Sbarro hired David Karam last year to lead the company go back on top.
This is actually the second time the company filed for bankruptcy. The company first noticeably struggled after taking debt in 2007 as part of buyout by investment firm MidOcean Partners. It closed more than 150 restaurants before its 2011 bankruptcy filing. That first filing prohibited MidOcean acquiring the pizza chain.
The company carries about $140 million in debt. In mid-February the company announced that it was closing about 155 of the 400 stores it owns in North America to cut costs. Mostly of the stores in America are based in malls and airports.
Analysts believed that the fall of Sbarro has something to do with the decrease of mall goers that started in 2008 due to worldwide recession. Since there are lots of restaurants catering pizza with lower prices, Sbarro continuously declined.
Last 2012, I reviewed the Sbarro in SM Fairview and to be honest, I found the foods they serve a little bland. But, despite of it, I am a witness to how blockbuster Sbarro is. The company never fail to show long lines in the counter every time I visit malls with Sbarro outlet. So, I can say, I’m shocked with this news.