Fairway Market Chain Owners File for Bankruptcy

Heavy competition and a large debt load has led Fairway Group Holdings, operator of the 14-store Fairway Market chain in New York, to file for Chapter 11 bankruptcy protection this week with the intention of auctioning off all its assets

Media reports indicate Fairway has agreed to sell its five Manhattan stores, including its Upper West Side flagship store, and a distribution facility to Village Super Market, which owns 30 ShopRite supermarkets, for $70 million.

Fairway is looking at more potential buyers for the other stores.

This week’s filing follows Fairway’s failed attempt last fall to put itself up for sale. At least partial blame for the lukewarm interest lay on the liabilities the company carries, including its labor and pension obligations. The Village Super Market sale, according to media reports, is “free and clear” of such liabilities. However, Fairway indicated if further auctions would not be able to achieve “free and clear” sales, it would have to liquidate.

Meanwhile, lenders are loaning Fairway $25 million to remain operational through the bankruptcy and reorganization process. Auctions are proposed for March with the process reaching completion by the end of May.

This is the second time Fairway has filed for bankruptcy protection – the first in 2016 after losing revenue in every quarter since its 2013 public offering, according to Bloomberg. Increased competition from other retailers including Whole Foods and Trader Joe’s have cut into Fairway’s customer base who value its quality meats, cheese and produce, and the debt it acquired following a private equity buyout was too much of a load to carry.