Sbarro, the operator of over 1,000 pizza outlets worldwide, has filed for Chapter 11 bankruptcy.
The company, which is 95% owned by private equity group MidOcean Partners, has struggled since August 2008, when it reported losses because of higher costs for ingredients, including cheese, flour and pasta.
The group, which operates outlets in shopping centres in 40 countries, has also struggled to meet payments on $150m in loan notes that were used in the acquisition by the private equity firm.
Sbarro said it has reached a deal with lenders on a reorganisation plan that will trim $200 million off its debt.
The group said it was also seeking approval from the US Bankruptcy Court for the Southern District of New York for a $35m bankruptcy financing agreement with certain existing first-line lenders
Nicholas McGrane, Sbarro interim president and chief executive, said: “We believe this plan represents the best opportunity for Sbarro to clear a path for future growth by restructuring its debt in an effective and timely manner. We are a strong company with one of the most recognizable restaurant brands in the world.”
