Iconic New York grocer files for bankruptcy

In a not unexpected move, Fairway Group Holding Corp., operator of the Fairway Market supermarket chain, filed for Chapter 11 bankruptcy protection.



The company filed a “prepackaged” bankruptcy restructuring under which its lenders agreed to exchange existing debt for new equity and debt in a reorganized company. Supporting lenders agreed to vote in favor of the plan and exchange their loans for common equity and $84 million of debt of the reorganized company.



In conjunction with the filing, Fairway is seeking approval to enter into a $55 million superpriority secured debtor-in-possession credit facility and a $30.6 million letter of credit facility to cover outstanding letters of credit.



“We believe that implementing this Prepackaged Plan is the best opportunity for Fairway to restructure its balance sheet on an expedited basis, strengthen its operations, retain jobs and create long-term value, while continuing to provide customers with the best food experience in the greater New York area,” said Jack Murphy, CEO.



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.