UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT of NEW YORK ------X : in Re : Chapter 11 : FAIRWAY GROUP HOLDINGS CORP., Et Al., : Case No
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20-10161-jlg Doc 346 Filed 03/24/20 Entered 03/24/20 00:37:05 Main Document Pg 1 of 154 UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK --------------------------------------------------------------- X : In re : Chapter 11 : FAIRWAY GROUP HOLDINGS CORP., et al., : Case No. 20-10161 (JLG) : Debtors.1 : (Jointly Administered) : --------------------------------------------------------------- X SCHEDULES OF ASSETS AND LIABILITIES AND STATEMENT OF FINANCIAL AFFAIRS FOR FAIRWAY GROUP HOLDINGS CORP., et al. CASE NO. 20-10161 1 The Debtors in these chapter 11 cases, along with the last four digits of each Debtor’s federal tax identification number, are as follows: Fairway Group Holdings Corp. (2788); Fairway Group Acquisition Company (2860); Fairway Bakery LLC (4129); Fairway Broadway LLC (8591); Fairway Chelsea LLC (0288); Fairway Construction Group, LLC (2741); Fairway Douglaston LLC (2650); Fairway East 86th Street LLC (3822); Fairway eCommerce LLC (3081); Fairway Georgetowne LLC (9609); Fairway Greenwich Street LLC (6422); Fairway Group Central Services LLC (7843); Fairway Group Plainview LLC (8643); Fairway Hudson Yards LLC (9331); Fairway Kips Bay LLC (0791); FN Store LLC (9240); Fairway Paramus LLC (3338); Fairway Pelham LLC (3119); Fairway Pelham Wines & Spirits LLC (3141); Fairway Red Hook LLC (8813); Fairway Stamford LLC (0738); Fairway Stamford Wines & Spirits LLC (3021); Fairway Staten Island LLC (1732); Fairway Uptown LLC (8719); Fairway Westbury LLC (6240); and Fairway Woodland Park LLC (9544). The location of the Debtors’ corporate headquarters is 2284 12th Avenue, New York, New York 10027. Fairway Community Foundation Inc., a charitable organization, owned by Fairway Group Holdings Corp., is not a debtor in these proceedings. WEIL:\97424119\6\44444.0009 20-10161-jlg Doc 346 Filed 03/24/20 Entered 03/24/20 00:37:05 Main Document Pg 2 of 154 GLOBAL NOTES AND STATEMENTS OF LIMITATIONS, METHODOLOGY, AND DISCLAIMERS REGARDING THE DEBTORS’ SCHEDULES OF ASSETS AND LIABILITIES AND STATEMENTS OF FINANCIAL AFFAIRS Fairway Group Holdings Corp. and certain of its affiliates, as debtors and debtors in possession (collectively, the “Debtors”), are filing their respective Schedules of Assets and Liabilities (each, a “Schedule,” and, collectively, the “Schedules”) and Statements of Financial Affairs (each, a “Statement” or “SOFA” and, collectively, the “Statements” or “SOFAs”) in the Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”) pursuant to section 521 of chapter 11 of title 11 of the United States Code (the “Bankruptcy Code”) and Rule 1007 of the Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”).2 These Global Notes and Statements of Limitations, Methodology, and Disclaimers Regarding the Debtors’ Schedules of Assets and Liabilities and Statements of Financial Affairs (collectively, the “Global Notes”) pertain to, are incorporated by reference in, and comprise an integral part of all of the Schedules and Statements. The Global Notes are in addition to the specific notes set forth below with respect to particular Schedules and Statements (the “Specific Notes” and, together with the Global Notes, the “Notes”). These Global Notes should be referred to, and referenced in connection with, any review of the Schedules and Statements. The Debtors’ management prepared the Schedules and Statements with the assistance of their advisors and other professionals. The Schedules and Statements are unaudited and subject to potential adjustment. In preparing the Schedules and Statements, the Debtors relied on financial data derived from their books and records that was available at the time of preparation. The Debtors’ management team and advisors have made reasonable efforts to ensure that the Schedules and Statements are as accurate and complete as possible under the circumstances; however, subsequent information or discovery may result in material changes to the Schedules and Statements and inadvertent errors or omissions may exist. Notwithstanding any such discovery, new information, or errors or omissions, the Debtors do not undertake any obligation or commitment to update the Schedules and Statements. The Debtors reserve all rights to amend or supplement the Schedules and Statements from time to time, in all respects, as may be necessary or appropriate, including the right to dispute or otherwise assert offsets or defenses to any claim reflected on the Schedules and Statements as to amount, liability, classification, identity of debtor or to otherwise subsequently designate any claim as “disputed,” “contingent,” or “unliquidated.” Furthermore, nothing contained in the Schedules, Statements, or Notes shall constitute a waiver of any of the Debtors’ rights or an admission with respect to their chapter 11 cases. 2 Capitalized terms used but not defined herein shall have the respective meanings ascribed to such terms in the Declarations of Michael Nowlan and Abel Porter Pursuant to Rule 1007-2 of the Local Bankruptcy Rules for the Southern District of New York, each sworn and filed on the Commencement Date (ECF Nos. 5 & 25) (the “First Day Declarations”) or the final order approving the Debtors’ debtor-in-possession financing (ECF No. 199) (the “Final DIP Order”), as applicable. 2 WEIL:\97424119\6\44444.0009 20-10161-jlg Doc 346 Filed 03/24/20 Entered 03/24/20 00:37:05 Main Document Pg 3 of 154 The Schedules, Statements, and Notes should not be relied upon by any persons for information relating to current or future financial conditions, events, or performance of any of the Debtors. 1. Description of the Cases. On January 23, 2020 (the “Commencement Date”), each of the Debtors commenced a voluntary case under chapter 11 of the Bankruptcy Code. The Debtors are authorized to operate their businesses and manage their properties as debtors in possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code. On January 30, 2020, the Bankruptcy Court entered an order authorizing the joint administration of these cases pursuant to Bankruptcy Rule 1015(b). On February 4, 2020 the United States Trustee for Region 2 (the “U.S. Trustee”) appointed an official committee of unsecured creditors pursuant to section 1102(a)(1) of the Bankruptcy Code (the “Creditors’ Committee”). 2. Basis of Presentation. For financial reporting purposes, the Debtors historically prepare consolidated financial statements, which include information for each of the Debtors. The Schedules and Statements are unaudited and reflect the Debtors’ reasonable efforts to report certain financial information of each Debtor on an unconsolidated basis. These Schedules and Statements, neither purport to represent financial statements prepared in accordance with Generally Accepted Accounting Principles in the United States (“GAAP”), nor are they intended to be fully reconciled with the financial statements of each Debtor or the consolidated entities. The Debtors attempted to attribute the assets and liabilities and certain required financial information to each particular Debtor entity. However, because the Debtors’ accounting systems, policies, and practices were developed for consolidated reporting purposes, rather than reporting by legal entity, it is possible that not all assets and liabilities have been recorded with the correct legal entity on the Schedules and Statements. Given, among other things, the uncertainty surrounding the valuation of certain assets and liabilities, a Debtor may report more assets than liabilities. Such report shall not constitute an admission that such Debtor was solvent on the Commencement Date or at any time before or after the Commencement Date. Likewise, a Debtor’s reporting more liabilities than assets shall not constitute an admission that such Debtor was insolvent at the Commencement Date or any time before or after the Commencement Date. 3. Reporting Date. The Debtors completed a fiscal period close on January 22, 2020 (the “Reporting Date”). Unless otherwise noted, the reported asset values in Schedules A and B align with the asset values as of the Reporting Date, and the liability values in Schedules D, E, and F are as of the Commencement Date, adjusted for authorized payments under the First Day Orders (as defined below). WEIL:\97424119\6\44444.0009 3 20-10161-jlg Doc 346 Filed 03/24/20 Entered 03/24/20 00:37:05 Main Document Pg 4 of 154 4. Current Values. The assets and liabilities of each Debtor are listed on the basis of the book value of the asset or liability in the respective Debtor’s accounting books and records. Unless otherwise noted, the carrying value on the Debtor’s books, rather than the current market value, is reflected in the Schedules and Statements. 5. Consolidated Entity Accounts Payable and Disbursement Systems. As described in the Cash Management Motion,3 the Debtors utilize an integrated, centralized cash management system, in the ordinary course of business, to collect, concentrate, and disburse funds generated by their operations (the “Cash Management System”). The Debtors maintain a consolidated accounts payable and disbursements system to pay operating and administrative expenses through various disbursement accounts. In the ordinary course of business, the Debtors maintain business relationships among each other, which result in intercompany receivables and payables (the “Intercompany Claims”) arising from intercompany transactions (the “Intercompany Transactions”). As set forth more fully in the Cash Management Motion, the primary Intercompany Transactions