A group of landlords and food suppliers expecting to go unpaid in Sbarro LLC's chapter 11 case are set to receive $1.25 million under a settlement reached last week with the Sbarro estate, the Wall Street Journal reported today. Cooley LLP attorney Seth Van Aalten, who represents the creditors, said that Sbarro's lenders have further agreed to continue doing business with the company's vendors and landlords once Sbarro emerges from bankruptcy. The lenders also agree not to sue trade creditors to recover money paid to them in the weeks before Sbarro filed for bankruptcy, Van Aalten said. Sbarro entered chapter 11 protection in March with a proposed bankruptcy exit plan backed by 98 percent of its lenders that swaps $140 million in debt for control of the restructured business. Sbarro said in court filings this week that it intends to go through with that plan after a deadline to bid on the company's assets passed with no potential buyers emerging.
