By Chris Isidore@CNNMoneyMarch 10, 2014: 11:37 AM ET
NEW YORK (CNNMoney)
The Sbarro pizza restaurant chain filed for bankruptcy court protection Monday, less than three weeks after it was forced to close more than 40% of its U.S. locations.
In a statement Monday the chain said the bankruptcy filing is a pre-packaged plan, which means that it has already agreed on a reorganization plan with creditors that hold 98% of the company's debt. That should allow it to quickly shed an estimated $140 million in debt, and emerge from bankruptcy as a healthier company.
It is the second bankruptcy filing in less than three years by the chain, which previously filed for bankruptcy in April 2011.
In February, the company announced it was closing 155 company-owned restaurants in the United States, effective immediately. That left it with 220 U.S. locations and more than 600 other locations owned by franchise operators in 40 different countries.
The closings left the company with about 2,700 employees. Spokesman Jonathan Dedmon said that no further restaurant closings are envisioned under the bankruptcy plan. He said Sbarro has already closed its weaker locations and expects to shed 80% of its debt during the bankruptcy. It has also secured $20 million in new financing.
"The previous closures and bankruptcy filing are part of an overall plan to invest in and grow the company for the future," he said.
Sbarro is best known for locations in airports, malls, train stations and highway rest stops -- high traffic locations with limited direct competition from other pizza chains. It also has only a fraction of the advertising budget of competitors such as Domino's Pizza(DPZ), Papa John's(PZZA), or Yum Brands'(YUM) Pizza Hut.