Fairway Market files Chapter 11 bankruptcy, gets bid for five stores

By Caroline Salls

Pittsburgh, Jan. 23 – Fairway Market filed Chapter 11 bankruptcy Thursday in the U.S. Bankruptcy Court for the Southern District of New York to complete a strategic sale process, according to a company news release.

Fairway said it has entered into a stalking horse asset purchase agreement with Village Super Market, Inc. to sell up to five New York City Fairway stores and its distribution center for $70 million.

If Village Super Market is not ultimately the high bidder, Fairway will pay it a 3% termination fee.

In addition, the company said it will execute a court-supervised sale process to continue to negotiate for the sale of its remaining store locations.

The deadline for submitting bids on all of the company’s assets is 4 p.m. ET on Feb. 28.

The designation date for stalking horse bids will be March 6, and the designation date for other qualified bids will be March 9.

If competing bids are received in the Village Super Market sale, an auction will be held on March 10 and the sale hearing will be held on March 26. If no competing bids are received, March 10 will be the sale hearing date.

The auction for other assets will be held on March 11 and the sale hearing on March 26.

The release said an informal group of Fairway’s senior lenders are supportive of the sale process and have agreed to provide the company with up to $25 million in debtor-in-possession financing.

Ankura Trust Co., LLC is the DIP facility agent.

Interest will accrue at a rate of 10%.

The financing will mature nine months from the filing date.

The company is seeking interim access to $15 million of the DIP loan.

Fairway said it will continue to conduct business and serve customers at its stores across the tri-state area and expects no interruption in service during the court-supervised process.

“After careful consideration of all alternatives, we have concluded that a court-supervised sale process is the best way to meet our objectives of preserving as many jobs as possible, maximizing value for our stakeholders and positioning Fairway for long-term success under new ownership,” chief executive officer Abel Porter said in the release.

Village Super Market CEO Robert Sumas said in the release, “We appreciate that Fairway’s loyal customers are concerned about the future, and if we are successful in our bid, we are committed to keeping Fairway, including its name, unique product selection and value, a part of this community.”

According to court documents, Fairway has $100 million to $500 million in both assets and debt.

The company’s largest unsecured creditor is United Natural Foods, Inc. of Providence, R.I., with a $1.84 million trade vendor claim.

No other unsecured creditors were listed with claims of $1 million or more.

Fairway’s legal counsel is Weil, Gotshal & Manges, LLP, its M&A investment banker is PJ Solomon and its financial advisers are Mackinac Partners.

Fairway is a supermarket chain with locations in New York, New Jersey and Connecticut. The Chapter 11 case number is 20-10161.

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