New York-based grocery chain Fairway Market has filed for Chapter 11 bankruptcy protection and plans to shut up to five of its 14 locations, along with a distribution center.
The company said Thursday morning that Village Super Market, which operates stores under the ShopRite and Gourmet Garage brands, has agreed to make a stalking horse asset purchase of as much as five Fairway shops in New York, as well as the distribution facility, for roughly $70 million. But the stalking horse agreement means there is still the opportunity for other businesses to come in and bid for the properties.
The announcement came just hours after Fairway denied a report that said the grocer was planning to pursue a complete liquidation of its business via a Chapter 7 filing.
Fairway first filed for Chapter 11 bankruptcy protection in 2016, three years after its IPO. The grocery chain took on too much debt and expanded too quickly, and it has also been unable to fend off rival grocery chains.
As chains such as Amazon-owned Whole Foods and Trader Joe's have spread across the New York area, it has put more pressure on Fairway and other businesses with smaller footprints to compete, especially on services like same-day delivery. Other grocery chains that have filed for bankruptcy in recent years include A&P, Winn-Dixie and Bi-Lo.
Fairway said Thursday that in court procedures it will continue to negotiate with buyers over its remaining locations in the New York area. The company said that it will receive as much as $25 million in debtor-in-possession financing to be able to continue "to conduct business and serve customers at its stores across the tri-state area" and anticipates that all existing customer promotional and loyalty programs will remain in place.
"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," Fairway CEO Abel Porter said in a statement.
Fairway started on the Upper West Side of Manhattan in the 1930s as a fruit and vegetable stand. Many New York residents who grew up shopping at Fairway have taken to social media to express their dissatisfaction over news that their local store might be closing, for good.