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Sbarro files for Chapter 11 bankruptcy reorganization once again

| Mar 20, 2014 | Chapter 11 |

Business owners in Tyler, Texas, would understand the detrimental effects that debt can have on the prospects of a business. In addition to the cash crunch, business debts can also harm the reputation of a business, and in the process, limit its future prospects for growth and sustainability. In such situations many businesses file for bankruptcy and reorganization under Chapter 11 of the United States Bankruptcy Code in an attempt to start over after taking necessary corrective actions.

Recently, Sbarro, a well-known name among pizza chains in the United States and other countries around the world, filed for Chapter 11 bankruptcy reorganization for the second time since April 2011. According to reports, Sbarro has been unable to generate profits from its business, mainly due to the drop in footfalls across shopping mall food courts in the U.S. Earlier this year, the owner of a hot dog brand also filed for bankruptcy, citing the same reason as Sbarro.

The bankruptcy filing follows the closure of 155 of its operating locations in the U.S. in February 2014. However, the company still has 800 operational outlets globally, half of them in the U.S. According to reports, the company aims to reduce its debts by 80 percent by closing stores and restructuring its balance sheet and in the process also improve its profitability.

It is important for business owners in Texas to know that business as well as personal debt relief can be sought by filing for bankruptcy under Chapter 7 or Chapter 13 of the Bankruptcy Code. But, these filings may only be available if the business is family owned, is a partnership, is a sole proprietorship, is a closely held business or if it is a limited liability company. However, if the business is incorporated, it may need reorganization under the guidelines set by Chapter 11 of the Bankruptcy Code. Therefore, consulting a bankruptcy lawyer may be a wise decision for business owners in such a situation.

Source: Fort Worth Star-Telegram, “Sbarro files for bankruptcy protection again,” Mar. 10, 2014