A&P Chapter 11 Filing Marks 19th Retail Bankruptcy in 2010
Today's Chapter 11 filing by the Great Atlantic & Pacific Tea Company, more commonly known as supermarket retailer A&P, brings to 19 the number of retail bankruptcies in 2010. A&P, which was founded in 1859, joins big retail names that have included Blockbuster, Jennifer Convertibles, Loehmann's and Movie Gallery.
A&P filed for Chapter 11 in the U.S. Bankruptcy Court for the Southern District of New York. The retailer, which operates 395 stores in the Northeast and mid-Atlantic under banners including A&P, Waldbaum's, Pathmark, Super Fresh and The Food Emporium, plans to keep its store open for business during its financial reorganization. The company will have access to $800 million in debtor in possession (DIP) financing from JPMorgan Chase, which will enable it to continue paying local suppliers, vendors, employees and others.
A&P has been struggling under the impact of fierce competition in the grocery arena, the recession's effects and debt from its purchase of Pathmark stores. The retailer was in the process of a turnaround that included installation of a new management team, reductions in structural and operating costs and improving the A&P value proposition for customers. A&P also closed 25 underperforming stores beginning in August.
According to published reports about its court filings, the current crisis came when A&P faced $13.4 million in interest payments due December 15, and was unable to reach an agreement with C&S Wholesale Grocers, which suppliers about 70% of A&P's inventory.
Another report speculates that A&P's bankruptcy may prompt Dutch competitor Royal Ahold NV to bid for the retailer's Pathmark stores in order to add to its grocery operations in the U.S.
For related content see:
A&P Closing 25 Stores in Five States
A&P Sales Drop 7 Percent in Quarter, New CEO Takes Helm
Bankruptcy Watch: Eight Retailers in the Red
Signs of the Post-Recession: Fewer Retail Bankruptcies in 2010
A&P filed for Chapter 11 in the U.S. Bankruptcy Court for the Southern District of New York. The retailer, which operates 395 stores in the Northeast and mid-Atlantic under banners including A&P, Waldbaum's, Pathmark, Super Fresh and The Food Emporium, plans to keep its store open for business during its financial reorganization. The company will have access to $800 million in debtor in possession (DIP) financing from JPMorgan Chase, which will enable it to continue paying local suppliers, vendors, employees and others.
A&P has been struggling under the impact of fierce competition in the grocery arena, the recession's effects and debt from its purchase of Pathmark stores. The retailer was in the process of a turnaround that included installation of a new management team, reductions in structural and operating costs and improving the A&P value proposition for customers. A&P also closed 25 underperforming stores beginning in August.
According to published reports about its court filings, the current crisis came when A&P faced $13.4 million in interest payments due December 15, and was unable to reach an agreement with C&S Wholesale Grocers, which suppliers about 70% of A&P's inventory.
Another report speculates that A&P's bankruptcy may prompt Dutch competitor Royal Ahold NV to bid for the retailer's Pathmark stores in order to add to its grocery operations in the U.S.
For related content see:
A&P Closing 25 Stores in Five States
A&P Sales Drop 7 Percent in Quarter, New CEO Takes Helm
Bankruptcy Watch: Eight Retailers in the Red
Signs of the Post-Recession: Fewer Retail Bankruptcies in 2010