Company Initiates Prepackaged
Chapter 11 Reorganization to Implement
Restructuring
Fairway Group Holdings Corp. (NASDAQ:FWM), the parent company of
Fairway Market, the iconic New York food retailer that offers
customers a differentiated one-stop shopping experience “Like No
Other Market”, today announced that the Company has reached an
agreement with its senior secured lenders holding more than 70% of
the Company’s senior secured debt on the terms of a reorganization
that will eliminate approximately $140 million of senior secured
debt and provide financing to restructure the Company’s balance
sheet.
To implement the agreed upon restructuring, Fairway Group
Holdings Corp and certain of its subsidiaries (“Fairway”) have
filed a Joint Prepackaged Chapter 11 Plan of Reorganization
(“Prepackaged Plan”) and filed voluntary petitions for protection
under Chapter 11 of the U.S. Bankruptcy Code in the United States
Bankruptcy Court for the Southern District of New York. The
Company intends to use the Chapter 11 process to facilitate a
financial restructuring designed to restore Fairway to long-term
financial health while continuing to operate in the normal course
of business without interruption.
In accordance with the Prepackaged Plan, holders of general
unsecured claims, including suppliers, employees, unions and all
other trade creditors will receive payment in full on account
of existing obligations in the ordinary course of business.
Further, the five collective bargaining agreements between Fairway
and each of the unions will be assumed under the Prepackaged Plan
and remain in full force and effect. All of the Company's
outstanding shares of common stock will be cancelled pursuant to
the Prepackaged Plan with no distribution to holders thereof.
As a part of the Prepackaged Plan, the Company entered into an
agreement with certain holders of the Company’s senior secured
loans. Supporting lenders agreed to vote in favor of the
Company’s Prepackaged Plan and exchange their loans for common
equity and $84 million of debt of the reorganized company.
All other prepetition creditors will not be impaired and will be
paid in in the ordinary course. Successful implementation of
the proposed plan would result in a substantial conversion into
equity of the Company’s $279 million of senior secured loans.
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. The proposed DIP financing will help support
Fairway’s reorganization plans and enable normal post-petition
operation of its business, including timely payment of employee
wages, benefits and other obligations on an uninterrupted basis.
In addition, the Company has also secured a commitment from
its current lenders to convert the amounts extended under the DIP
loan to an exit loan. The Company has also filed a number of
customary first day motions with the Bankruptcy Court to support
ongoing operations.
“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, Chief Executive Officer. “Over 80 years ago, Fairway
started as a fresh fruit and veggie stand at the corner of 74th
& Broadway. It grew into the greatest food store in the
country. Fairway is famous for apples stacked to the ceiling,
olives straight from Italy, New York style bagels, hand sliced
smoked salmon, prime beef and specialty imports. Nobody
slices a fish or boils a bagel like us. Nobody.”
The Company expects no interruptions to customer service
throughout the process. Consumers can continue to purchase
Fairway’s products at one of their 15 stores, 4 Wine and Spirits
stores or Manhattan residents can shop online at
https://shop.fairwaymarket.com/.
Vendors and other stakeholders can obtain additional information
about the reorganization by visiting
https://cases.primeclerk.com/fairway or by calling (844)
597-1421. During the Chapter 11 process, the Company expects
to pay for purchases of goods and services in the ordinary course
of business. Fairway’s legal advisor is Weil, Gotshal & Manges
LLP. Dennis Stogsdill of Alvarez & Marsal North America
LLC, has been appointed Chief Restructuring Officer for the Company
during the chapter 11 cases. Norton Rose Fulbright US
LLP is special corporate counsel to Fairway.
The Company's senior secured lenders are being advised by King
& Spalding LLP, as legal counsel, and Moelis & Company LLC
as financial advisor.
Forward-Looking StatementsThis press release
contains forward-looking statements within the “safe harbor”
provisions of the Private Securities Litigation Reform Act of 1995
that involve risks and uncertainties, as well as assumptions that,
if they do not fully materialize or prove incorrect, could cause
the Company’s business and results of operations to differ
materially from those expressed or implied by such forward-looking
statements. Forward-looking statements can be identified by
the use of words such as “will,” “may,” “should,” “expects,”
“plans,” “anticipates,” “believes,” “estimates,” “predicts,”
“intends,” “potential,” “continue,” or the negative of such terms,
or other comparable terminology.
Risk factors that may affect the Company’s results include, but
are not limited to, those described under the heading “Item
1A. Risk Factors” in the Company’s most recent Annual Report
on Form 10-K and under the heading “Item 1A. Risk Factors” in the
Company’s most recent Quarterly Report on Form 10-Q, as well as the
following: the ability of the Company to continue as a going
concern; the Company’s ability to obtain Bankruptcy Court approval
with respect to motions in the chapter 11 cases; the ability of the
Company and its subsidiaries to prosecute, develop and consummate
the Prepackaged Plan; the effects of the bankruptcy filing on
Fairway and the interests of various creditors, equity holders and
other constituents; Bankruptcy Court rulings in the chapter 11
cases and the outcome of the cases in general; the length of time
Fairway may operate under the chapter 11 cases; risks associated
with third-party motions in the chapter 11 cases, which may
interfere with Fairway’s ability to develop and consummate the
Prepackaged Plan; the potential adverse effects of the chapter 11
proceedings on Fairway’s liquidity or results of operations; the
potential adverse effects of the chapter 11 proceedings on
Fairway’s relationships with suppliers, employees and customers;
the ability to execute Fairway’s business and restructuring plan;
increased legal costs related to the bankruptcy filing and other
litigation; and Fairway’s ability to maintain contracts that are
critical to its operation, to obtain and maintain normal terms with
customers, suppliers and service providers and to retain key
executives, managers and employees.
Any forward-looking statement made by the Company in this press
release speaks only as of the date on which such forward-looking
statement was made. New risks and uncertainties arise from
time to time, and the Company cannot predict these events or how
they may affect the Company’s business, financial condition or
operations. The Company undertakes no obligation to update or
revise the forward-looking statements in this press release after
the date hereof, except as may be required by law.
About Fairway Fairway Market is a food retailer
offering customers a differentiated one-stop shopping experience
“Like No Other Market”. Fairway has established itself as a
leading food retailing destination in the Greater New York City
metropolitan area, with stores that emphasize an extensive
selection of fresh, natural and organic products, prepared foods
and hard-to-find specialty and gourmet offerings, along with a full
assortment of conventional groceries. Fairway is
headquartered in New York, New York. You can shop our products
online at https://shop.fairwaymarket.com/, or visit one of our 15
stores in New York, New Jersey and Connecticut.
Contacts:
Media
Nicholas Gutierrez
(646) 616-8103
nicholas.gutierrez@fairwaymarket.com
Investment Community
Nicholas Gutierrez
(646) 616-8103
nicholas.gutierrez@fairwaymarket.com