Grocery chain Fairway Group Holdings Corp. is preparing to file for bankruptcy protection as soon as tonight after reaching a deal with its senior creditors, according to people with knowledge of the matter.
The New York-based gourmet grocer will file its petition in the Southern District of New York, said the people, who asked not to be identified because the preparations are private. A majority of the company’s lenders have agreed to a prearranged restructuring plan that gives control to them after the bankruptcy, the people said.
Fairway, a New York City institution known for its high-end produce and private brands, has struggled to generate profits while expanding to new areas and fending off competitors. National chains such as Whole Foods Market Inc. and Trader Joe’s started aggressively competing in New York City, while Costco Wholesale Corp. began selling similar high-end products at lower prices.
Led by GSO Capital Partners, the credit arm of Blackstone Group LP, Fairway lenders agreed to a tentative version of the bankruptcy proposal last month that aimed to put the company into Chapter 11 by the end of May, people with knowledge of the matter said at the time.
Nicholas Gutierrez, a spokesman for Fairway, declined to comment.
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