Sbarro Inc., the 800-restaurant U.S. pizza chain in bankruptcy, has seen signs of interest from 31 potential bidders ahead of an auction for which it seeks initial offers by April 14, a financial adviser for the company said.
Of 114 possible buyers contacted, 31 signed confidentiality agreements to learn more about Sbarro, Adam Keil, a managing director at investment bank Moelis & Co., said April 4 in a filing in U.S. Bankruptcy Court in New York.
“I believe the length and breadth of the marketing efforts has been sufficient for all potentially interested parties to know that the business is ‘in play,’” Keil wrote.
Sbarro’s secured lenders already have a proposal to buy the company under a reorganization plan that provides for an auction to test the market for higher bids. The plan has support of holders of 98 percent of secured lender claims, Keil said.
The winning bidder must pay the company’s bankruptcy loans in full and offer more than $500,000 more than the $35 million credit bid made by the secured lenders.
Sbarro, based in Melville, New York, will go before U.S. Bankruptcy Judge Martin Glenn today seeking permission to follow bid procedures for the auction, cancel leases for unwanted restaurant locations and extend its use of cash in bankruptcy.
The company filed for bankruptcy in March for the second time in three years, citing slowing customer traffic in its shopping-mall locations.
The case is In re Sbarro, 14-bk-10557, U.S. Bankruptcy Court, Southern District of New York (Manhattan).