A&P files for Chapter 11 protection
December 13, 2010
by Keith Nunes
MONTVALE, N.J. — The A&P retail chain, formally known as the Great Atlantic & Pacific Tea Co., filed for Chapter 11 bankruptcy protection on Sunday with the U.S. Bankruptcy Court for the Southern District of New York. The company said it will continue to operate as it goes through the reorganization process and that it has access to $800 million in debtor in possession financing to continue to pay vendors.
“We have taken this difficult but necessary step to enable A&P to fully implement our comprehensive financial and operational restructuring,” said Sam Martin, chief executive officer. “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.”
In its filing with the bankruptcy court, the retail chain listed its total debt at approximately $3.2 billion and assets at approximately $2.5 billion.
The company said it already had begun to take steps to initiate a turnaround. Some of the efforts included putting a new management team in place, reducing the retailer’s operating costs, providing a better value proposition to consumers and taking steps to improve the customer’s experience in the store.
Frederic F. Brace, who was chief administrative officer, has been named chief restructuring officer by the company and will lead the reorganization effort.
For the second quarter, ended Sept. 11, A&P incurred a loss of $153,674,000. The loss compared unfavorably to the same period of the previous year when it experienced a loss of $80,309,000.
Sales for the period also declined to $1,918,279,000. During the second quarter of the previous fiscal year sales were $2,065,061,000.