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Fairway Market Files For Chapter 11 Bankruptcy

fairway jan23 lt

New York-based grocery chain Fairway Market has filed for Chapter 11 bankruptcy protection, but said its stores will remain open across the Tri-State area during the court process and it does not expect any service interruptions.

This is the second time the company has filed for bankruptcy. The company earlier filed for Chapter 11 bankruptcy protection in 2016 and received financing from private equity firm Blackstone.

The 87-year-old company said in a statement on Thursday that it has filed a voluntary petition under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of New York to complete its strategic sale process.

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

Village Super Market operates a chain of supermarkets and specialty markets in the Northeast under the ShopRite and Gourmet Garage banners.

Fairway added that it will execute a court-supervised sale process to continue to negotiate for the sale of its remaining store locations.

The company noted that an ad hoc group of its 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.

Fairway Market was established in 1933 and operates 14 stores in New York, New Jersey, and Connecticut, as well as an e-commerce platform. The company is well known for its wide selection of cheese, assortment of foods from around the world, and authentic hand-crafted specialties.

However, Fairway's decision to expand beyond Manhattan, stiff competition from online delivery services, and the arrival of rivals like Whole Foods in New York City hurt the company's business.

On Wednesday, Fairway Market denied a report it is filing for Chapter 7 bankruptcy protection, saying it had no intention to file for Chapter 7 or liquidate all of its stores.

"All 14 stores remain open for business, offering a complete range of high quality, specialty food products, and we look forward to seeing our consumers and employees," Fairway Market said in a statement.

The New York Post reported on Tuesday that Fairway was planning to file for a Chapter 7 bankruptcy, which means the grocery chain does not plan to continue to exist.

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