The shopping mall pizza chain Sbarro has filed for bankruptcy protection and will close 155 stores across North America in order to cut labor costs.
This is the second time in three years that Sbarro has filed for bankruptcy protection, due to lower customer traffic in the malls and a growing pile of debt.
Sbarro and its company affiliates filed for Chapter 11 protection from creditors with the U.S. Bankruptcy Court in Manhattan.
Chapter 11 bankruptcy laws permit businesses more time to reorganize assets and offers them a chance to restructure their business in order to pay off the debts, unless the companys debt exceeds its assets. In most cases the trustee or creditor is given empowerment to operate the debtors business, till the debtor can lower its debt or come up with a plan to liquidate its assets.
The pizza company based out of New York has around $100 million and $500 million in both assets and liabilities, according to court papers.
Sbarro has continually struggled with with high food, labor and occupancy costs, according to Moody investors.
Despite the store closures across North America Sbarro will still have more than 800 stores worldwide, including those owned by franchisers.
Gennaro and Carmela Sbarro founded the pizza chain in 1956, after moving to the United States from Italy. The company originally started out as a small Italian grocery store that sold pizza by the slice, before becoming popular and opening up pizza restaurants in malls across America.
Sbarro previously applied for Chapter 11 bankruptcy back in, April 2011, after listing assets of $471 million and debt of $486.6 million. In 2011 it was the fifth largest pizza chain in America, according to Pizza Today.
The pizza chain was granted court approval to emerge from bankruptcy under a plan requiring restructuring and ceding ownership to lenders.
Now the franchised company is forced yet again to file for bankruptcy protection due to its poor financial situation.
Sbarro Pizza Closing 155 Stores To Protect From Going Bankrupt.