The half-century-old Fairway gourmet grocery chain, which began as a small produce stand on Manhattan’s Upper West Side and has since grown to a 15-store network in New York, Connecticut and New Jersey, announced Tuesday that it had filed for bankruptcy.
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The company now operates 15 stores throughout New York, Connecticut and New Jersey with the 2010 Fairway Market in Stamford their largest location and only one in Fairfield County. The company said store operations are expected to continue with no impact on customers, suppliers or employees.
In February, Fairway warned that it was in danger of violating its loan agreement in the next several months and said it must reduce its debt to remain viable.
“The real show-stopper here is that Fairway is not liquidating, unlike most every other retailer who is filing for bankruptcy today”, said David Tawil, president of Maglan Capital.
However, in recent years, Fairway’s losses and debts increased as sales and store locations have grown. Within four years, Fairway had expanded to nine locations and employed 3,500 people.
PE firm Sterling Investment Partners, which acquired Fairway in a $150 million leveraged buyout, and other shareholders will lose their stakes.
“We believe that implementing this prepackaged [bankruptcy] 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 NY area”, CEO Jack Murphy said in a news release.
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In conjunction with its filing, the Company is seeking approval to enter into a $55 million superpriority secured debtor-in-possession (“DIP”) credit facility and a $30.6 million letter of credit facility to cover outstanding letters of credit, which will be provided by certain of the Company’s existing senior secured lenders.
