The famous food court staple Sbarro Inc. has hired bankruptcy lawyers to possibly start working on its Chapter 11 bankruptcy restructuring plans. It will rely on the experts at Kirkland & Ellis to restructure its balance sheet, as well as Rothschild Inc. for additional restructuring advice.
While hiring these lawyers and advisors doesn't necessarily mean that Sbarro will file for bankruptcy protection, they could be looking into ways to restructure debt outside of Chapter 11 bankruptcy. If Sbarro is able to reconfigure its debt sheet and work out deals with creditors than it might be able to avoid bankruptcy court altogether.
At this time the company, based in Melville, NY, has a whopping debt price tag of $350 million. It was able to enter a forbearance agreement with Bank of America Corp. to stop creditors from foreclosing on assets or similar actions that are triggered by default. This agreement gives them leeway until January 31.
Ares Management holds about half of Sbarro's $150 million in bond debt while MidOcean holds 95 percent of the company's second-lien debt.
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