Fairway will likely be put into Chapter 11 proceedings by the end of May as a result of the deal, according to Bloomberg.
While details of the plan are still being determined, Fairway would work on maintaining its business without closing most of its stores, the report said. The company currently has seven locations in New York City.
Earlier this year, it was reported that Fairway Market was facing "significant losses."
Its net losses were listed at $35.7 million in the quarter ending Dec. 27, 2015.