Quiznos Bankruptcy News Update: Quiznos Corporation, the Denver-based toasted-sandwich chain, filed for bankruptcy days after pizzeria company Sbarro LLC sought protection from creditors, as competition among fast-food restaurants grows in a tight market, report from Bloomberg said.
Reuters reported that the chain, known for pioneering the concept of toasted subs, said the restructuring would cut its debt by more than $400 million. It listed liabilities of between $500 million and $1 billion in its bankcruptcy petition. All except seven of its nearly 2,100 restaurants are independently owned and operated by franchisees and will not be affected by the bankruptcy, the company said in a statement.
Stuart K. Mathis, Quiznos' chief executive, said in a news release," "Our business plan includes several key elements aimed at supporting our franchisees, including reducing food costs, implementing a franchise owner rebate program. The actions we are taking are intended to enable Quiznos to reduce our debt, execute a comprehensive plan to further enhance the customer experience, elevate the profile of the brand and help increase sales and profits for our franchise owners."
Under the restructuring plan shown in the Court paper, Quiznos' senior lenders would trade more than $444 million in debt for all of the equity in the restaurant chain, subject to dilution. The lenders, which have offered $15 million to finance the company's restructuring, also would get $200 million in new debt under the so-called prepackaged bankruptcy plan. Court papers show about 61% of Quiznos' senior lenders have agreed to support the plan, as have 99% of its junior lenders, owed $173.8 million. Such plans allow for speedier and cheaper Chapter 11 proceedings, report as cited in The Wall Street Journal.
Quiznos' filing, which The Wall Street Journal previously had reported was in the works, comes two years into a major turnaround effort that included an out-of-court debt restructuring and a management shake-up.
Sbarro LLC also filed for its second bankruptcy in three years earlier this week after struggling with fewer customers.
