(Updates with court ruling in second paragraph.)
Nov. 17 (Bloomberg) -- Sbarro Inc., the fast-food pizza restaurant chain, won approval of its plan to restructure and exit bankruptcy protection.
Sbarro will give ownership of the reorganized company to senior lenders owed about $176 million under the proposal approved today by U.S. Bankruptcy Judge Shelley C. Chapman in Manhattan.
The company, based in Melville, New York, started as an Italian restaurant in Brooklyn, New York, in 1956 and has more than 1,000 company-owned and franchised restaurants, according to its court filings.
Sbarro, acquired in 2007 by the private-equity firm MidOcean Partners, filed for bankruptcy in April, blaming reduced consumer traffic at shopping malls and increased competition at food courts. Increases in ingredient costs also led to higher costs, it said.
The bankruptcy plan gives first-lien lenders a recovery of from 69 percent to 95 percent on their claims, according to a plan description. The plan gives no recovery for second-lien claims of about $34 million and general unsecured creditors with as much as $173 million in claims, according to court documents.
The case is In re Sbarro Inc., 11-11527, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
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