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There simply aren't enough customers in our lines, says Sbarro

Whether it is the new focus on farm to table, the advent of online shopping or some other reason, customers simply aren’t spending as much money at some shopping mall eateries. The Italian fast-food chain Sbarro recently filed for Chapter 11 bankruptcy protection, and the main reason cited was a noticeable reduction in customer visits at shopping malls.

Although the company plans to shut down several struggling locations across North America, the company intends to keep a large number of locations open -- as is common under many other Chapter 11 bankruptcy plans. The units that will remain open include 220 locations in the United States and approximately 800 worldwide. The locations include some that were purchased as a franchise.

In order to implement this reorganization plan, the company put together a new management team. As for financial resources, the company has several creditors that are willing to invest $20 million in debtor-in-possession financing. This money, along with the elimination of approximately $140 million in outstanding secured debt, would decrease the total debt by 80 percent.

The company released these details in a recent statement concerning the company’s intentions. The bankruptcy court will still have to approve the plan.

This is the second time in the past three years that the company will have sought bankruptcy protection. The prior bankruptcy was filed in April 2011. The company then emerged from bankruptcy the following November. The company expects a swift exit this second time around.

No one can predict the future, and the truth is that in some cases such as this one, a company may find itself in need of legal relief more than once. Companies in Salem, New Hampshire, that have concerns about how their rights could be affected by a second bankruptcy filing simply need to discuss their individual circumstances with a bankruptcy attorney.

Source: Los Angeles Times, “Sbarro files for second bankruptcy in three years,” Tiffany Hsu, March 10, 2014

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