MONTVALE, N.J. — The Great Atlantic & Pacific Tea Company (A&P) has filed for Chapter 11 bankruptcy and agreed to sell about 120 of its stores for $600 million. The company operates 296 supermarket and liquor stores under the brand names of A&P, Best Cellars, Food Basics, the Food Emporium, Pathmark, Superfresh and Waldbaum’s.
The stores are situated throughout the East Coast, including New York, New Jersey, Pennsylvania, Delaware, Massachusetts, Maryland and Connecticut.
A&P will operate as business as usual throughout the court-supervised sale process. The company will soon close 25 stores, however, due to ongoing operating losses.
“After careful consideration of all alternatives, we have concluded that a sale process implemented through Chapter 11 is the best way for A&P to preserve as many jobs as possible, and maximize value for all stakeholders,” says Paul Hertz, A&P’s president and CEO. “While the decision to close some stores is always difficult, these actions will enable the company to refocus its efforts to ensure the vast majority of A&P stores continue operating under new owners as a result of the court-supervised process.”
The Great Atlantic & Pacific Tea Company was founded in Montvale in 1859. It was initially a small chain of coffee and tea stores.
After enjoying nearly a century’s worth of growth, it became difficult for the chain’s formats to compete with larger, more modern supermarkets and their amenities. A&P underwent a series of management changes in the 1970s, which eventually led to its acquisition by Germany-based Tengelmann Group.
The company began expanding once again in 1982. A&P was hit hard by the most recent recession, however, causing it to file for Chapter 11 bankruptcy protection for the first time in 2010. It emerged from bankruptcy in 2012 as a private company.
A&P filed its recent voluntary petition under Chapter 11 of the U.S. Bankruptcy Code with the U.S. Bankruptcy Court for the Southern District of New York. It is also seeking court approval to enter into a $100 million debtor-in-possession (DIP) financing agreement with Fortress Investment Group.
An approval hearing for the DIP agreement has been scheduled for later today. If approved, this facility will enable A&P to continue operating its stores, pay its suppliers, vendors, employees and others.
Christopher McGarry has been named as the company’s chief restructuring officer. Weil, Gotshal & Manges LLP will serve as the company’s legal representative, while Evercore, FTI Consulting and Hilco Global will act as its financial advisors.
— Nellie Day