Inside This Issue - News
A&P starts restructuring under Chapter 11
January 10th, 2011
MONTVALE, N.J. – A&P has filed for protection under Chapter 11 of the bankruptcy code in an effort to carry out further financial and operational restructuring.
In addition, Christian Haub, who had been executive chairman, has relinquished any executive role with the company, although he retains the title of chairman.
The troubled regional supermarket operator has access to $800 million in debtor-in-possession (DIP) financing from JPMorgan Chase & Co., which enables it to continue paying local suppliers, vendors and employees. According to management, all stores are fully stocked and all promotional programs remain in place.
"We have taken this difficult but necessary step to enable A&P to fully implement our comprehensive financial and operational restructuring," said Sam Martin, president and chief executive officer, in a statement. "While we have made substantial progress on the operational and merchandising aspects of our turnaround plan, we concluded that we could not complete our turnaround without availing ourselves of Chapter 11. It will allow us to restructure our debt, reduce our structural costs and address our legacy issues."
Frederic Brace, who was appointed chief administrative officer in August, has taken on the additional role and title of chief restructuring officer.
The bankruptcy filing, which was not a surprise to observers, ignited speculation that A&P may take the opportunity to close as many as 100 of its 395 stores. The United Food and Commercial Workers Union (UFCW) has been in contact with the office of New York mayor Michael Bloomberg and council speaker Christine Quinn in an effort to prevent the closure of up to 58 stores located in the five boroughs of New York City. The stores employ about 6,500 workers.
Management had warned that it might not be able to avert bankruptcy when it issued its second quarter financial results last October. The company’s net loss for that period grew nearly 130% to $142.8 million, while same-store sales declined 6.6%.
A&P had already begun to jettison stores, having sold seven Connecticut locations to Big Y Foods Inc. In November it agreed to sell six locations for $89.8 million in a sale-leaseback transaction.
Unusually, A&P did not enter bankruptcy with a prearranged plan for coming out of Chapter 11 protection.