Grocer Fairway Denies Reports of Impending Bankruptcy
The New York City fixture was said to be planning a Chapter 7 filing
By Sarika Gangar January 22, 2020 12:20 pm
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New York City-based grocer Fairway Market said it has “no intention” of filing for bankruptcy amid media reports stating that it was planning to shut down.
A report late yesterday in the New York Post stated that the grocer, which has its flagship store at Broadway and West 74th Street on the Upper West Side, was planning to file for Chapter 7 bankruptcy as early as today. The move would lead to the closure of all of its stores, which are located in New York, New Jersey and Connecticut, the article said.
“Despite reports, Fairway Market has no intention to file for Chapter 7 or liquidate all of its stores,” according to a company statement. “All 14 stores remain open for business, offering a complete range of high-quality, specialty food products, and we look forward to seeing our customers and employees.”
While the situation remains fluid, it appears ripe for a change of control transaction via a sale or a debt-for-equity swap, said Robert Gayda, a partner in Seward & Kissel‘s bankruptcy and reorganization group, who is not currently involved in the matter. “Fairway (or its new owners) could stand to benefit by using a Chapter 11 process to renegotiate its leases, which are a significant cost of Fairway’s operations,” he said.
The chain, which did a trip through bankruptcy court in 2016, has been hobbled following a private equity-led buyout in 2007 which led to a poorly-planned expansion, a burdensome debt load and an ill-advised initial public offering, as Commercial Observer reported.
“They built a beautiful store, but nobody was watching the expenses,” John Catsimatidis, owner of the Red Apple Group and the Gristedes stores, told CO at the time. “It’s very hard for hedge funds to own food companies, because with food companies, you have to be very patient. There’s no instantaneous profit. There is profit there, but you have to grind it out. It takes time. The old-timers say, ‘you’ve got to watch your pennies.’ ”
Opened in 1933 by Nathan Glickberg, Fairway spent its first several decades as a simple Upper West Side fruit-and-vegetable stand before expanding to become a full-on grocer in 1954. The firm has faced competition from Trader Joe’s and Whole Foods, with Fresh Direct and other online grocers also chipping away at its business.
UPDATE: This story has been updated since publication to include attorney commentary.
