COURT: Fairway Group receives approval for three asset sales totaling USD 82.5m

Judge James Garrity today approved Fairway Group’s motion to sell its assets, given that the resolutions presented in today’s hearing are carried through.

The asset sales include a USD 76m sale to Village Super Markets Inc. of six of the company’s grocery stores and one distribution center, a USD 5m sale to Seven Seas Georgetown on a going concern basis and a USD 1.5m sale of two leases to Amazon Retail.

The three transactions total USD 82.5m, plus other consideration, and will preserve 1,300 jobs.

Before today’s hearing, some landlords raised issues of accrued but unbilled charges and indemnification, but ultimately agreed to the solutions put forth by debtors’ counsel. However, the landlord for the Upper West Side location, with respect to the Village Super Markets sale, pursued an objection over adequate assurance at the hearing.

The landlord, identified as 229 West 74th Street Corporation in court papers, argued that two months of security deposit is required to ensure adequate assurance as the entity that Village plans to assign the lease to does not have enough assets to provide adequate assurance. Village’s counsel countered that two months of security is only required for landlord consent to assignment.

After hearing arguments, Judge Garrity overruled the objection and authorized the assignment of the lease as requested.

At the end of today’s hearing, the judge heard the debtor’s key employee incentive plan (KEIP) and key employee retention plan (KERP) proposals. Of note, the KERP was reduced by USD 350,000 to USD 1.15m. Counsel also noted that the KEIP will not increase Fairway’s indebtedness. The judge approved the motion for the KEIP and KERP proposals.

Fairway filed for Chapter 11 in January to sell its assets, bogged down by USD 227m in secured debt and USD 15m in unsecured trade debt.

Related links:
Debtwire Dockets: Fairway Group Holdings
Debtwire Restructuring Database: Fairway Group Holdings (Access required)

2020 Debtwire

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