Austin Texas based Schlotzsky?s, a deli sandwich franchiser with over 500 outlets in 36 states and six countries has filed for protection from creditors under Chapter Eleven of the federal bankruptcy laws.

Schlotzsky?s which owns 21 stores and franchisees its remaining outlets, reported a net loss of $11.7 million in 2003 and a first-quarter loss of $671,000. Last month, it announced it was cutting 20 percent of its corporate staff and closing 15 company operated stores.

Schlotzsky?s said operations at its 513 shops would continue normally during the financial restructuring. Sam Coats, Schlotzsky?s President & CEO said, ?It became apparent to our board that this action was necessary to protect Schlotzsky?s from millions of dollars in claims, judgments, and debts accumulated during the past few years.?

?I believe the actions taken by the board took great courage and are clearly in the best interest of the company,? Coats said.

Shares of Schlotzsky?s fell 89 cents, or 53 percent, to 76 cents in afternoon trading on the Nasdaq market.