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MONTVALE, N.J. — A&P has filed for bankruptcy, the second time in five years that the food and drug retailer has sought Chapter 11 protection.
The supermarket operator said Monday that it has executed asset purchase agreements for about 120 stores at a price of roughly $600 million. A&P also said it has decided to close 25 stores in the near term because of a lack of interest and significant ongoing store operating losses.
“After careful consideration of all alternatives, we have concluded that a sale process implemented through Chapter 11 is the best way for A&P to preserve as many jobs as possible and maximize value for all stakeholders,” A&P chairman, president and chief executive officer Paul Hertz said in a statement. “The interest from other strategic operators has been robust during the company’s sales process to date, and we have every expectation that will continue in Chapter 11.
“While the decision to close some stores is always difficult, these actions will enable the company to refocus its efforts to ensure the vast majority of A&P stores continue operating under new owners as a result of the court-supervised process,” Hertz added.
According to a Reuters report on Monday, A&P is in discussions with Acme Markets (a subsidiary of Albertsons), Stop & Shop (part of Ahold USA) and Key Food Stores Cooperative to buy its assets.
News reports had surfaced last week that A&P was mulling a bankruptcy filing. A&P said Monday that it filed a voluntary petition under Chapter 11 with the U.S. Bankruptcy Court for the Southern District of New York.
A&P said it will continue to conduct business and serve customers at its stores during the court-supervised sale process. The company said the open stores are fully stocked, and all customer promotional and loyalty programs will stay in place during this process.
Currently, A&P operates 296 stores under the A&P, Best Cellars, Food Basics, Food Emporium, Pathmark, Superfresh and Waldbaum’s banners in Connecticut, New York, New Jersey, Pennsylvania, Delaware and Maryland. About half of the supermarket locations have pharmacies.
A&P has named Christopher McGarry as chief restructuring officer. The company said the sale process could include a possible credit bid for certain assets to be purchased by A&P’s current investors.
The company also announced that it is seeking court approval to enter into a $100 million debtor-in-possession (DIP) financing agreement with Fortress Investment Group. A hearing to approve the DIP facility has been scheduled for July 20. Upon approval, this facility will enable A&P to continue operating its stores, pay its suppliers, vendors, employees and others in the ordinary course of business.
