A&P Files For Ch. 11 Bankruptcy, 2nd Time In 5 Years
NEW YORK (CBS/AP) — Grocery store operator A&P is filing for Chapter 11 bankruptcy with plans to sell off stores as it faces increasingly tough competition.
This marks the second time in five years that the Montvale, New Jersey-based company has filed for bankruptcy. This time around, it said it has more than 100,000 creditors along with more than $1 billion in liabilities and over $1 billion in assets.
The company plans to sell as many of its 296 stores as possible and said in a filing with U.S. Bankruptcy Court in New York that it has bidders for 120 of those operations with expected proceeds of $600 million.
The Stop & Shop Supermarket Co., owned by supermarket giant Ahold, said that it has struck a deal to buy 25 A&P stores in the greater New York area for $146 million.
Like many grocers, A&P has faced tougher competition from companies like Wal-Mart Stores Inc. and Target Corp. expanding their grocery options. The business has grown even more crowded and competitive with companies like Whole Foods Market Inc. and Fairway Group Holdings Corp. catering to a more health-conscious market.
The company's formal name is the Great Atlantic & Pacific Tea Co. It was formed in 1859 as The Great American Tea Co. and renamed to its current form in 1869. A&P operates in Connecticut, New York, New Jersey, Pennsylvania, Delaware and Maryland under various names, including PathMark and Waldbaum's.
A Chapter 11 filing gives a company a chance to reorganize its finances without added pressure from creditors.
Nine supermarkets in our area will close up shop quickly, if A&P gets its way in its second bankruptcy filing in five years. KYW's Ian Bush reports it'll leave shoppers and workers in the lurch.
The grocery business already is low-margin, but 25 stores operated by A&P apparently aren't close to breaking even and aren't sought-after real estate.
They include Pathmark locations on Cottman Avenue in Burholme; on Franklin Mills Blvd. in the Northeast; along Swedesford Road in Berwyn; on MacDade Blvd. in Folsom; and on Lancaster Pike in Wilmington.
Some Superfresh stores would go dark: on Columbus Blvd. in South Philly; on Skippack Pike in Center Square; along Route 1 in Kennett Square; and along Route 13 in Claymont.
Others are in North Jersey and New York. A bankruptcy judge will have to approve the sale before a closing date is known.
KYW's Justin Udo spoke with shoppers at the Superfresh on Columbus Boulevard in South Philadelphia.
"I'm going to miss this store, it's so convenient because I just live down the road. Where am I going to go now? I don't know what I'm going to do. I'm speechless," said a shopper.
"I like coming to this one because it's spread out and they have more items in there," said another shopper.
"For me it's just hitting the pavement and finding work elsewhere," said a worker.
"It's the reorganization of my life and all my fellow employees' lives."
A&P plans to sell or auction off the rest of its stores -- about 270. Acme Markets is one of the prospective buyers.
Christopher McGarry, A&P's chief restructuring officer, says the company made a mistake during its last bankruptcy filing in 2010 when it kept dozens of under-performing stores open "in favor of preserving the jobs in those stores" as those "obligations have been a drain on the company" in the interim.
KYW's Ian Bush and Justin Udo contributed to this report.
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