FAIRWAY GROUP: Unsecured Creditors to Recover 1.0%-1.5% in Plan

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Fairway Group Holdings Corp. and its affiliated debtors filed with the U.S. Bankruptcy Court for the Southern District of New York a Joint Chapter 11 Plan of Reorganization and a Disclosure Statement dated July 3, 2020.

The Debtors commenced Chapter 11 cases to implement a strategic asset sale strategy to maximize recoveries for all creditors and preserve as many jobs as possible. On Feb., 21, 2020, the Bankruptcy Court entered an order approving the relief requested in the Bidding Procedures Motion, including auction and sale procedures for the sale of the Assets.

The Debtors successfully conducted a robust marketing process, followed by a nine-day global auction for the sale of the Assets, which commenced on March 16, 2020. On March 25, 2020, the Debtors announced in the Notice Of Successful Bidders At Global Auction the following three Successful Bids for an aggregate purchase price of approximately $82.5 million: (i) a going concern sale of five stores, the lease for the parking lot at the Debtors’ Harlem location, and the Debtors’ 240,000 square foot production and distribution center and related assets to Village Super Market, Inc. for a purchase price of approximately $76 million, (ii) a going concern sale of the Debtors’ Georgetowne store to Seven Seas Georgetowne, LLC for a purchase price of approximately $5 million, and (iii) a sale of the store leases relating to the Debtors’ Paramus and Woodland Park stores to Amazon Retail, LLC for a purchase price of $1.5 million.

As part of the Global Settlement among the Debtors, the Creditors’ Committee, the UFCW Parties and the Ad Hoc Group, $1.5 million will be contributed to a general unsecured recovery trust for the benefit of Allowed General Unsecured Claims.

The Plan is the product of good-faith arm’s-length negotiations and is consistent with the objectives of chapter 11. Throughout these chapter 11 cases, the Debtors worked closely and in coordination with their key stakeholders, including the Ad Hoc Group and the Creditors’ Committee, both of which actively participated in the development and negotiation of the Plan and support confirmation of the Plan. The UFCW Parties have also committed to accept the Plan so long as the Plan is consistent with the UFCW Settlement.

Class 6 General Unsecured Claims are projected to recover 1.0% to 1.5%. Each such holder thereof shall receive (i) such holder’s Pro Rata share of (x) the GUC Recovery Trust Interests and (y) the Net Cash Proceeds after the Prepetition Loan Claims are satisfied in full in Cash, until all Allowed General Unsecured Claims are satisfied in full; and (ii) if such holder of an Allowed General Unsecured Claim satisfies the requirements to be a Released Avoidance Party, such holder shall be treated as a Released Avoidance Party.

With respect to Class 9 Parent Equity Interests, if the Reorganized Equity Plan Election is made, all Parent Equity Interests will be deemed cancelled without further action by or order of the Bankruptcy Court, and shall be of no further force or effect, whether surrendered for cancellation or not.

A full-text copy of the Disclosure Statement dated July 3, 2020, is available at from PacerMonitor at no charge.

The Debtors are represented by:

Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, NY 10153
Attn: Ray C. Schrock, P.C.
Sunny Singh, Esq.
Telephone: (212) 310-8000
Facsimile: (212) 310-8007

About Fairway Group Holdings Corp.

Fairway Group is a food retailer operating 14 supermarkets across the New York, New Jersey and Connecticut tri-state area, including two with freestanding wine and liquor stores (the Stamford and Pelham locations) and two with in-store wine and liquor stores (the Woodland Park and Paramus locations). The company’s flagship store is located at Broadway and West 74th Street, on the Upper West Side of Manhattan, featuring a cafe, Sur la Route, and state of the art cooking school. Fairway’s stores emphasize an extensive selection of fresh, natural, and organic products, prepared foods, and hard-to-find specialty and gourmet offerings, along with a full assortment of conventional groceries.

The Glickberg family launched the business as a small fruit and vegetable stand on the Upper West Side. The iconic market has been providing New Yorkers groceries since the mid-1930s and has since expanded to 21 locations across the tri-state area.

Fairway has filed for Chapter 11 bankruptcy twice in four years. The company dug itself out of Chapter 11 proceedings in 2016 by borrowing money and shifting ownership from Sterling Investment Partners to a consortium led by Blackstone’s GSO Capital Partners.

Fairway Group Holdings Corp. and 25 affiliated companies sought Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 20-10161) on Jan. 23, 2020. In the petitions signed by CEO Abel Porter, the Debtors were estimated to have $100 million to $500 million in assets and liabilities. Judge James L. Garrity, Jr., is assigned to the cases.

The Debtors tapped Weil, Gotshal & Manges LLP as legal counsel; Peter J. Solomon and Mackinac Partners, LLC as financial advisor; and Omni Agent Solutions as claims, noticing and solicitation agent.

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