DENVER—Quiznos last week filed for Chapter 11 bankruptcy in a move to cut its debt by more than $400 million, or roughly two thirds.
The quick-service restaurant said it anticipates emerging from bankruptcy "on an accelerated basis" because creditor groups have voted in favor of a pre-packaged restructuring plan.
Revenues at Quiznos have plummeted over the last six years from $774 million in 2007 to $236 million in 2013, according to court records.
In court filings, Quiznos listed total outstanding debt of $626 million as of March 11, 2014, with creditors holding a first lien totaling $452.6 million and a second lien totaling $139.2 million.
The company attributed a number of factors to the bankruptcy filing, including its capital structure and the current economic environment affecting the restaurant industry. Quiznos also cited certain misconduct by former officers, board members and related parties in connection with a 2012 restructuring that left the company with "an unsustainable debt burden and a capital structure that significantly inhibited growth."
Last year, revenues fell 29% to $236 million and the number of stores declined to 2,099 from 2,577 a year earlier.
The Chapter 11 proceedings in Wilmington, Del. before U.S. Bankruptcy Judge Peter Walsh exclude nearly all Quiznos' restaurants because all but seven are independently owned and operated by franchisees in the United States and 30 other countries around the world.
Quiznos said the restaurants are "open and operating as usual."
Quiznos CEO Stuart Mathis said the business plan is intended to reduce food costs, implement a rebate program for franchise owners, provide loans to franchisees for restaurant improvements, invest in advertising and offer new incentives for prospective franchisees.
In connection with the restructuring plan, Quiznos has received a commitment for $15 million in debtor-in-possession financing from its senior lenders. Subject to court approval, the financing will support Quiznos' operations during the bankruptcy proceedings.
Quiznos has retained Akin Gump Strauss Hauer & Felds LLP as its legal advisor, Lazard Freres & Co. LLC as its financial advisor and Alvarez Marsal as its restructuring advisor.
Quiznos was founded in 1981 with the opening of a restaurant in Denver. Quiznos Corp. became a public company in 1994 through an initial public offering but has been privately held for more than a decade.
Last year, the sub shop generated $636.4 million in global system-wide sales, resulting in revenues of $235.9 million, according to a court filing.