Sbarro filed for bankruptcy for the second time in three years as the pizza chain watches foot traffic slow in the malls many of its restaurants occupy.

The Melville, N.Y., company filed for Chapter 11 protection in U.S. Bankruptcy Court in Manhattan on Monday along with more than 30 affiliates.

Sbarro had sought bankruptcy in April 2011, emerging the next November.

This time, the Italian-style eateries has racked up between $100 million and $500 million in both assets and liabilities, according to the company.


And like fellow mall chain Hot Dog on a Stick, which filed for Chapter 11 bankruptcy in February, Sbarro indicated that customer visits to shopping centers have dwindled.

Last month, Sbarro said it would shutter 155 struggling company-owned restaurants in North America. But the closures would leave more than 800 units, including franchised locations, open worldwide, with 220 in the United States, the company said.

[Updated 8:45 a.m. PDT March 10: In a statement, the company said the filing was designed to “implement a prepackaged reorganization plan” and allow for a speedy exit from bankruptcy so that Sbarro’s new management team can re-form the business.

Creditors supporting Sbarro’s filing are providing $20 million of debtor-in-possession financing, which will remain on the company’s balance sheet after the bankruptcy.


Roughly $140 million of outstanding secured debt will be wiped clean as priority lenders receive “substantially all of the equity in the reorganized business,” according to Sbarro.

The arrangement, along with the store closures, is expected to improve Sbarro’s profitability and reduce its outstanding debt by more than 80%, the company said.

Sbarro “remains a strong and vibrant brand,” the company said in its statement.]

Sbarro was founded in 1956 by a family of the same name.


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