Fairway Market filed for bankruptcy on Thursday with a plan to save a handful of stores, including the flagship on Manhattan’s Upper West Side.
But the beloved Big Apple grocer also confirmed that many of its stores could close and said it’s unable to guarantee that the Fairway name will continue to be used.
In a “frequently asked questions” memo to customers, the company said it expects “that the Fairway brand will survive the bankruptcy,” but admitted that “much remains uncertain.” It also warned that some “stores may close.”
Fairway filed for Chapter 11 bankruptcy early Thursday with a deal to sell up to five New York City stores and its distribution center for about $70 million to Village Super Market, which operates about 30 ShopRite locations in the New York region.
The deal with Village Super Market includes Fairway’s flagship Upper West Side store at 2131 Broadway along with its Harlem, Chelsea, Kips Bay and Upper East Side locations, court records show. Village’s offer is a stalking-horse bid, meaning it would be the starting price for the stores in an auction.
Fairway will continue to negotiate sales for its nine remaining stores in a court-supervised process as it goes through Chapter 11, the company said in a news release.
Amid stiff competition from rival supermarkets and online grocery services, Fairway had less than $1 million in cash on hand when it filed for bankruptcy, court records show. Those liquidity struggles would not have allowed the 87-year-old supermarket to keep operating after Thursday, according to the filings.
A group of Fairway’s lenders have committed $25 million to keep the company afloat during the bankruptcy case, the filings said.
“The timely sale of substantially all of the debtors’ assets … is the best way to avoid a fire-sale liquidation,” the company said in the filing. “Liquidation would be a worst-case scenario for all of the debtors’ economic stakeholders, including for thousands of Fairway employees.”
“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.
The early-morning bankruptcy filing came the day after Fairway denied The Post’s Tuesday report that it was preparing for a liquidation bankruptcy that would shutter all of its stores, including its flagship at Broadway and West 74th Street.
Still, it’s a sad turn for the NYC institution, which opened its first outpost on Broadway and West 74th Street in 1933. The market, whose tag line is “Like no other market,” developed a strong following over the decades due to its fresh but inexpensive produce and its wide selection of cheeses and smoked fish.
Things began to change in 2007 after the Glickberg family sold an 80 percent stake to private equity firm Sterling Investment, which overwhelmed the company with debt as part of its suburban-expansion plan. Customers began to gripe about higher prices for lower-quality meats and produce.
Fairway previously filed for Chapter 11 bankruptcy in 2016 after reaching a deal with lenders to cut roughly $140 million in debt.
Most companies that file for Chapter 11 a second time — known as “Chapter 22” in industry parlance — end up in liquidation, said bankruptcy attorney Joseph Saracheck. Fairway looks particularly vulnerable because “they have virtually no cash,” Sarachek said.