(USA Today) -- Quiznos is preparing to file for bankruptcy protection within the next few weeks due to declining sales and about $570 million in debt, according to reports published Thursday evening.
Citing people familiar with the matter, The Wall Street Journal and CNBC said the sandwich chain has been negotiating with creditors on a restructuring plan to help with the bankruptcy court process. A final deal on the plan has not yet been reached.
Two years earlier, the privately held Quiznos reached an out-of-court restructuring deal that cut its debt load by more than a third.
Now, lenders have granted the Denver-based chain forbearance agreements to keep the company alive while negotiating repayment terms with creditors Fortress Investment Group, Oaktree Capital Management and Avenue Capital Group.
The Chapter 11 filing would help the company deal with its leases, outstanding litigation and unattractive contracts, which were struck before Quiznos began closing thousands of its stores over the past few years.
Competitor Subway's $5 foot-long sandwich deal was one reason Quiznos' sales have declined, said The Journal.
Founded in 1981, Quiznos was most famous for its toasted subs. The company hit its peak in the 2000s. Since, the top-performing stores' average annual sales have declined by about $125,000. Worse decline is seen at the weakest stores.
Quiznos currently has 2,100 stores worldwide, while Subway has more than 41,000.