It looks like New York-based Sbarro Inc. won't be receiving Chapter 11 protection, after all. The company announced that it has consensually terminated its prepetition plan support agreement and equity commitment agreement with Ares and MidOcean in order to explore "other strategic alternatives."

These alternatives include discussions with a qualified bidder who has expressed some interest in acquiring the shopping mall pizza staple.

In addition, the company continues to negotiate with its prepetition creditors to pursue a standalone plan of reorganization.

"We believe it is in the best interest of all stakeholders for the company to dedicate its resources to exploring all available value maximizing alternatives. We greatly appreciate the initial and continued interest of Ares and MidOcean in the Company, as well as the continued participation of the first lien lenders and the new interest from a sophisticated bidder," said Nicholas McGrane, interim president and CEO of Sbarro. "As we move through this process, Sbarro's restaurants will continue to operate in the normal course."

Today's announcement follows discussions with key stakeholders, including Ares, MidOcean and the first lien steering committee. Each have expressed support for the company's decision to pursue multiple avenues to maximize value and not to file a plan of reorganization or seek approval of the equity commitment agreement at this time.

An anonymous source told Bloomberg that the bidding party may buy the entire 1,000-plus-unit chain for more than the original proposal was worth in exchange for cutting its debt. The deal is said to include a $30 million rights offering.

Sbarro filed for bankruptcy protection on April 4. The cases are pending before the Honorable Shelley C. Chapman in the United States Bankruptcy Court for the Southern District of New York under case number 11-11527 (SCC).

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