Sandwich chain Quiznos filed for pre-packaged bankruptcy protection on Friday after struggling for years with high debt and rising competition.
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 bankruptcy 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.
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"Our business plan includes several key elements aimed at supporting our franchisees, including reducing food costs, implementing a franchise owner rebate program,'' Quiznos Chief Executive Stuart Mathis said.
The company has received $15 million in debtor-in-possession financing from its senior lenders in order to keep functioning during its restructuring period.
Quiznos has been facing stiff competition from its biggest rival Subway, one of the largest fast-food chain in the world with over 41,000 franchised stores in about 100 countries.
The company also faces competition from newer entrants such as Potbelly, whose low-priced menus have appealed to consumers in a tough economy.
Struggling pizza chain Sbarro also filed for its second bankruptcy in three years earlier this week, after struggling with fewer customers in malls that house many of its restaurants.
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A pre-packaged bankruptcy is when an entity negotiates a deal with creditors and other interested parties in advance and presents that to a bankruptcy court judge. Pre-packaged plans greatly reduce uncertainty and legal fees.