Quiznos Turns to Bankruptcy Amidst Increased Competition

By: Stephen Krug, Law ClerkThe various entities that comprise the Quiznos sandwich chain ("debtors") filed for Chapter 11 bankruptcy protection in the United States Bankruptcy Court for the District of Delaware on March 14, 2014.   A motion filed by debtors for joint administration of the cases was granted on March 17, and the case has been assigned to the Honorable Peter J. Walsh.While debtors' liabilities range from $500 million to $1 billion, the assets are only estimated to fall between $0 and $50,000.  However, Debtors maintain that, although assets are low and 10,001 to 25,000 creditors exist, funds will be available for distribution to unsecured creditors. U.S. Bank National Association, as administrative agent and collateral agent under debtors' second lien financing facility, is the largest unsecured claimant with a claim for approximately $174 million.  Horizon Media Inc., MG-1005, LLC, and ESPN Inc. also hold substantial unsecured claims.Debtors have proposed a pre-packaged reorganization plan that would slash debt by more than $400 million and would permit the handful of company-owned sandwich shops to remain operational.  Sandwich stores operated by franchisees are not part of the bankruptcy proceedings and thus are not provided for in the pre-packaged plan.Debtors hope to emerge from bankruptcy more viable than ever. Moving forward, debtors hope to reduce food costs and place more of an emphasis on advertising.Debtors are represented by Mark D. Collins of Richards, Layton & Finger, P.A.