To make its second recovery from bankruptcy last longer than its first, Sbarro Holdings LLC must work harder to relieve its lease burdens, streamline its organizational structure, and squeeze new concessions from creditors that have already been burned, experts say.

The troubled restaurant chain has slid back into bankruptcy just two years after existing Chapter 11 protection, and it is offering up a new debt-for-equity swap deal to lenders. While the company appears to be starting to rework its real estate portfolio, it’s less clear whether Sbarro can restructure its operations and refresh its branding to complete against new rivals.

“I just don’t know if they used the prebankruptcy period to look at, and modify, how they operate,” said Brent Weisenberg, an attorney with Ballard Spahr.

It appears that the bankruptcy proceedings are focused on balance sheet restructuring, with the company's debtors agreeing to let Sbarro reduce its outstanding secured debt by about 80 percent and extending some $20 million in debtor in possession financing.

“I suspect that you’ll see a relatively quick bankruptcy where the debtor’s balance sheet will be restructured and the company’s store footprint will be reduced,” Mr. Weisenberg said. “Sbarro will use this as an opportunity to modify their leases, and landlords that don’t play ball may face a closure of their store.”

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