MONTVALE, N.J – The Great Atlantic & Pacific Tea Company Inc. (A&P) has filed a voluntary petition under Chapter 11 of the US Bankruptcy Code with the US Bankruptcy Court for the Southern District of New York. The Chapter 11 process will facilitate A&P’s financial and operational restructuring, which is designed to restore the company to long-term financial health.
A&P will continue to conduct its business and serve customers at its 395 stores. The company’s stores are fully stocked with their complete range of high quality products, and all existing customer promotional and customer loyalty programs will stay in place. The company will have access to $800 million in debtor in possession (DIP) financing, which will enable it to continue paying local suppliers, vendors, employees and others in the normal course of business.
“We have taken this difficult but necessary step to enable A&P to fully implement our comprehensive financial and operational restructuring,” said Sam Martin, A&P president and CEO. “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.”
With the protections afforded by the Bankruptcy Code and the backing of a new, pre-eminent lender, we can make strategic decisions that will benefit the company over the long term, enabling A&P to emerge with a new capital structure and in a much improved position to exploit its fundamental strengths, he added.
As the company implements its financial and operational restructuring, it intends to continue and accelerate most of the basic elements of the turnaround plan announced in October, including: A completely new management team is in place; reducing structural and operating cost; improving the A&P value proposition for customers; and enhancing the customer experience in stores.
A&P’s major shareholders support the action announced Dec. 12 and believe the company’s plan will advance and accelerate the comprehensive turnaround effort already underway.
The company also announced that Frederic Brace, who was named chief administrative officer in August, will lead the company’s restructuring effort. Brace will take the additional title of chief restructuring officer to reflect his expanded role.
The company has entered into an $800 million DIP facility with JPMorgan Chase & Co. The company’s ability to obtain borrowings under such facility is subject to satisfaction of customary conditions and receipt of court approval. The DIP facility is being fully underwritten by JPMorgan Chase. A hearing to approve a portion of the facility has been scheduled for Dec. 13.
The company expects to receive full authority to pay employee wages and benefits on an uninterrupted basis.
A&P was founded in 1859. It operates 395 stores in eight states and the District of Columbia under the names A&P, Waldbaum’s, Pathmark, Best Cellars, The Food Emporium, Super Fresh and Food Basics.