Fairway Group Files For Bankruptcy

(RTTNews) - Fairway Group Holdings Corp. (FWM) and certain of its subsidiaries have filed a Joint Prepackaged Chapter 11 Plan of Reorganization and filed voluntary petitions for protection under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York.

The company said it intends to use the Chapter 11 process to facilitate a financial restructuring designed to restore Fairway to long-term financial health while continuing to operate in the normal course of business without interruption.

Fairway Group reached an agreement with its senior secured lenders holding more than 70% of the Company's senior secured debt on the terms of a reorganization that will eliminate approximately $140 million of senior secured debt and provide financing to restructure the Company's balance sheet.

As a part of the Prepackaged Plan, the Company entered into an agreement with certain holders of the Company's senior secured loans. Supporting lenders agreed to vote in favor of the Company's Prepackaged Plan and exchange their loans for common equity and $84 million of debt of the reorganized company. All other prepetition creditors will not be impaired and will be paid in in the ordinary course. Successful implementation of the proposed plan would result in a substantial conversion into equity of the Company's $279 million of senior secured loans.

The company is seeking approval to enter into a $55 million superpriority secured debtor-in-possession ("DIP") credit facility and a $30.6 million letter of credit facility to cover outstanding letters of credit, which will be provided by certain of the Company's existing senior secured lenders.