Quiznos Bankruptcy: Toasted Sandwich Chain Faces Subway Competition

Sandwich chain Quiznos Corp. filed for bankruptcy protection on Friday, as the Denver-based chain seeks to slice its debt by more than $400 million.

Known for its toasted subs, the chain listed liabilities of between $500 million and $1 billion in its petition, according to NBC News. The company has secured $15 million from its senior lenders to keep the business operating during the process.

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"It's a survival of the fittest," Bob Goldin, executive vice president at Chicago-based restaurant researcher Technomic Inc. told Bloomberg News. "The market is not growing, or it's barely growing, so the weak players are getting weeded out."

Quiznos is the second nationwide food outlet to file for bankruptcy this week. Pizza chain Sbarro filed for its second bankruptcy in three years on Monday.

All but seven of Quiznos' approximately 2,100 restaurants are independently owned and operated by franchisees. They won't be affected by the filing, the company said in a statement.

The company has faced increased competition from powerhouse rival Subway, which has more than 41,000 franchised locations in about 100 countries.

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In a pre-packaged bankruptcy like Quiznos', an entity presents an already agreed upon deal with creditors to a bankruptcy court judge, thus reducing uncertainty and legal fees.

In December 2011, Quiznos reached an agreement with creditors that infused $150 million in new equity capital, and cut $300 million from its' debt load. At the time, the move staved off bankruptcy.