Grocery store owner A&P announced on Monday it has filed for Chapter 11 bankruptcy and plans to sell off as many stores as possible. This is the second bankruptcy in five years for the beleaguered grocer.
A&P’s roots in the grocery business stretch all the way back to its founding in 1859. The firm claims to have launched the first U.S. supermarket in 1936, a giant 28,125-square-foot grocery store in Braddock, Pa. A few years after the Second World War, A&P dominated the grocery business in America with more than 16,000 locations across the country.
German Tengelmann Group bought A&P in a restructuring in 1979, but the business has been heading steadily downhill for some time, as a series of strategic blunders, industry changes and financial problems led to the double bankruptcy.
A&P currently operates close to 300 grocery stores in Connecticut, New York, New Jersey, Pennsylvania, Delaware and Maryland under a variety of names, including PathMark and Waldbaums.
Statement from A&P
A&P CEO Paul Hertz called the bankruptcy and store closures the right decision on Monday, with the goal to “preserve as many jobs as possible” and “maximize value for all stakeholders.”
“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 noted. “We greatly appreciate the continued support of our customers, suppliers and employees, who have maintained an unwavering commitment to our business and our customers.”
More on A&P bankruptcy
Sadly, this is the second time in just five years that the New Jersey-based grocery chain has filed for bankruptcy. This time it claims 100,000 creditors along with more than $1 billion in liabilities and over $1 billion in assets.
The reorganization plan calls for the firm to dispose of as many of its 296 stores as possible, and a filing in the bankruptcy case noted that it already has bidders for 120 of those stores with expected proceeds of at least $600 million.
Analysts point out that A&P has $100 million debtor-in-possession loan in place. This type of loan permits bankrupt businesses to receive funds to wind down operations while under court supervision.
