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To start your week, Cars.com goes up for sale, Apple releases iOS 7.1, Sbarro files for bankruptcy again and Y-combinator is seeking summer interns.

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Sbarro Emerges from Chapter 11 Without MidOcean or Ares

Sbarro, which is no longer backed by MidOcean Partners, has successfully come out of bankruptcy.

Late Monday, the quick service restaurant said it had emerged from Chapter 11 with significantly reduced debt and a $35 million capital infusion. “Our reorganization plan eliminates more than 70 percent of our debt, and provides access to $35 million in fresh capital from our new ownership group,” said Nicholas McGrane, Sbarro’s interim president and CEO, in a statement.

Banks Still Waiting for Sbarro To Deliver

Sbarro, the quick-serve pizza chain owned by MidOcean Partners, could be in trouble with its banks again.

Last quarter, Melville, N.Y.-based Sbarro posted 12-month trailing EBITDA of $41.7 million, which is just $1.7 million shy of breaching covenant agreement with its lenders.

This comes just one year after the company was in noncompliance with its banks over its high debt (currently $336.3 million) but was able to get a waiver and refinance. The refinancing required Sbarro to maintain a minimum 12-month trailing EBITDA of $40 million each quarter. This minimum will rise to $43 million in December, according to regulatory filings.

Colbert: A Bailout for Sbarro?

Should private equity-backed pizza chain Sbarro get a federal bailout? That was the question on Stephen Colbert’s mind last night, given that the company’s debt was recently downgraded amid concerns that it could not honor certain loan covenants.

You might think the answer is an obvious “no,” given that Sbarro owner MidOcean Partners could pony up the dough if it finds Sbarro worthy enough, but Colbert notes that the “mall staple” has something extra going for it:

“Everyone knows the finest cheese is aged, and no cheese slice sits out longer than the ones at Sbarro.”

So where does Colbert come down on a bailout for Sbarro? Or how about Abry Partners-backed Muzak? Check out the video after the jump…

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