Fairway Group Holdings Corp. (NASDAQ: FWM), a New York City grocery chain that has over 80-year history, has filed for bankruptcy after going public for only three years.
Founded in 1930s by Nathan Glickberg, Fairway Market started as a fruit and vegetable stand on the Upper West Side named as “74 Street Market”. After years of development, the company expanded into a wider variety of specialties, such as dairy products, meat and fish. Fairway Market currently has 15 stores in the Greater New York City area, seven of which are located in Manhattan.
Fairway Market started its expansion plan in 2007, when the company was bought by private equity firm Sterling Investment Partners. The company sold an 80 percent stake to Sterling Investment Partners for $150 million. In 2013, Fairway was listed on Nasdaq at a $536 million valuation, raising $177 million for a nationwide expansion, and sold shares for $13.
However, in recent years, Fairway’s losses and debts increased as sales and store locations have grown. As outlets like Whole foods and Trader Joe’s, retailers like drugstores and convenience stores increased, Fairway faced growing competition.
Fairway has a senior debt of $279 million, and it emphasized that it would start a Chapter 11 restructuring plan “without interruption” to its business, according to its statement and court filings. The company expects to eliminate $140 million of the debt through reorganization plan and it is also seeking $55 million in debtor-in-possession financing and a $30.6 million credit facility.
"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," Fairway CEO Jack Murphy said in a statement.
The restructure plan will give Fairway a new start after eliminating the heavy debts. Just like Jack Murphy said, "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."