New York City residents have likely shopped at or walked by a supermarket owned by The Great Atlantic & Pacific Tea Company or A&P as it’s more commonly known. The 156-year-old Northeast grocery store chain recently announced it is filing for Chapter 11 bankruptcy protection. The news was met with sadness by many New Yorkers regard A&P as a being a New York City’s institution and blame competition from big-box and lower cost retailers for contributing to the company’s financial difficulties.
As part of its bankruptcy filing, A&P revealed it has assets of $1.6 billion and debts totaling $2.3 billion. Businesses that are facing unmanageable debt-to-profit ratios must often make difficult decisions. In a July 20 press release, the company cited Chapter 11 bankruptcy as the best option for preserving jobs and maximizing “value for all stakeholders.”
As part of the company’s plans for restructuring debts and assets under Chapter 11, it announced securing purchase agreements with other grocery store chains of “120 stores at a purchase price of approximately $600 million.” Additionally, the company announced the planned future closings of approximately 25 of its 296 stores, while reassuring loyal customers that the remaining stores will remain open, fully stocked and functioning.
Given the careful planning and strategic business agreements already secured, it appears as through A&P is poised for success as it moves through the bankruptcy process. Through Chapter 11, A&P will be afforded the opportunities to renegotiate leases and contracts with creditors and also restructure and eliminate outstanding debts.
Businesses that are struggling with debt problems can benefit from the advice and assistance of an attorney who handles debt restructuring and resolution matters. An attorney can assess a company’s financial situation to determine viable options and help determine if Chapter 11 makes sense.
Source: New York Post, “Historic grocery chain A&P files for Chapter 11,” James Covert, July 20, 2015
New York Post, “A&P could soon be gone for good,” James Covert, July 15, 2015