US-based grocery chain Fairway Market has filed for Chapter 11 Plan of Reorganization in a New York court to implement financial restructuring.

The reorganisation is expected to eliminate about $140m of senior secured debt and finance the restructure of the company’s balance sheet.

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The plan of reorganisation has been filed for protection under Chapter 11 of the US Bankruptcy Code in the US Bankruptcy Court for the Southern District of New York.

Fairway plans to use the process to aid a financial restructuring which has been designed to restore the company to long-term financial health.

"We believe that implementing this pre-packaged plan is the best opportunity for Fairway to restructure its balance sheet on an expedited basis, strengthen its operations, retain jobs and create long-term value."

In accordance with the plan, general unsecured claims holders, including suppliers, employees, unions and all other trade creditors, will receive full payment on account of existing obligations during the ordinary course of business.

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As a part of the plan, Fairway signed an agreement with certain holders of its senior secured loans.

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If implemented successfully, the proposed plan is expected to result in a substantial conversion into equity of the company’s $279m of senior secured loans.

The company is also seeking approval to enter into a $55m superpriority secured debtor-in-possession (DIP) credit facility as well as a $30.6m letter of credit facility in order to cover outstanding letters of credit.

Fairway CEO Jack Murphy said: "We believe that implementing this pre-packaged plan is the best opportunity for Fairway to restructure its balance sheet on an expedited basis, strengthen its operations, retain jobs and create long-term value, while continuing to provide customers with the best food experience in the greater New York area."