Sbarro Files Plan

Sbarro filed with the US Bankruptcy Court on August 10, 2011 a Chapter 11 Plan of Reorganization and related Disclosure Statement, which uses Section 1129 of the Bankruptcy Code to create a separate plan for each of the 28 Debtors.

The Disclosure Statement explains, "...$35 million of loans expected to be outstanding under the DIP Facility will be converted on a dollar-for-dollar basis into a portion of the $110 million Exit Term Loan Facility and issued to the DIP Lenders on the Effective Date; Approximately $75 million of the Prepetition First Lien Credit Facility will be converted into the remainder of the $110 million Exit Term Loan Facility to be issued Pro Rata to the Prepetition First Lien Lenders on the Effective Date; The remaining approximately $100 million in secured indebtedness outstanding under the Prepetition First Lien Credit Facility (excluding amounts related to existing letters of credit, which will be addressed with the New Money Exit Facility) plus any First Lien Adequate Protection Claims that are not otherwise restructured under the Exit Term Loan Facility will be converted into 100% of the common equity of Reorganized Sbarro and distributed Pro Rata to the Prepetition First Lien Lenders on account of the obligations owed to them under the Prepetition First Lien Credit Facility and the First Lien Adequate Protection Claims; The Debtors' obligations under the Prepetition Second Lien Credit Agreement will be canceled and discharged; General Unsecured Claims against the Debtors, including $150 million in outstanding unsecured Senior Notes plus accrued interest, will be canceled and discharged; The general unsecured Claims held by certain trade creditors with whom the Debtors intend to conduct business post-emergence will receive their Pro Rata share of $250,000 in Cash; All Equity Interests in Sbarro Holdings, LLC will be extinguished; and Certain of the Debtors' Prepetition First Lien Lenders have committed to provide the Debtors with a new money term loan facility of $18.6 million to be used for general corporate and working capital needs (as well as to cash Under the Plan, the Debtors' Prepetition First Lien Lenders will own substantially all of the New Common Stock in Reorganized Holdings, subject to dilution only by shares allocated to Reserved Employee Equity and/or issued in connection with the Management Equity Plan." The Court scheduled a September 7, 2011 hearing to consider the Disclosure Statement.