New York grocer gets Chapter 11 ruling

Fairway Group Holdings Corp., the parent company of Fairway Market, has received a verdict on its May 2016 bankruptcy filing.



The iconic New York food retailer had its Chapter 11 bankruptcy reorganization plan unanimously accepted by 100% of voting secured lenders and confirmed by Bankruptcy Judge Michael E. Wiles. Fairway is expected to emerge from bankruptcy during the week of June 20, 2016 with approximately $50 million in cash, a $140 million reduction of its debt and a reduction of annual debt service obligations by up to $8 million.



In accordance with the plan, all pre-petition unsecured creditors, including suppliers, employees, unions and other trade creditors, will continue to be paid in the ordinary course of business. The senior secured lenders will exchange their loans for new common equity of Fairway and some reinstated debt. All of Fairway's outstanding shares of common stock will be cancelled with no distribution to the holders.



Fairway, known for its signature “Like No Other Market” tagline, plans to continue to operate its 15 stores, which are located primarily in the New York City metro area. The chain has struggled in recent years amid increased competition from online services, brick-and-mortar stores such as Whole Foods Market and Trader Joe’s and mass-marketers who expanded into food. It also took on increased debt to fuel expansion. In addition, Fairway is on target to open a new Fairway store in Georgetown, Brooklyn, in late 2016.



"We will emerge from bankruptcy with a stronger balance sheet, $50 million in cash and the backing and commitment from the senior lenders and new shareholders to re-invest in the future of Fairway,” said Jack Murphy, CEO. “We will continue to provide to our customers the best food experience in the greater New York area and we pride ourselves on continuously improving our product offering while maintaining the freshness and quality our loyal customers have come to expect."