Great Atlantic & Pacific Tea Co. filed for Chapter 11 bankruptcy again, just three years after emerging from court protection with the help of investors, including Ron Burkle's Yucaipa Cos.
As of last year, there were at least 34 Waldbaums and 20 Pathmarks remaining in Nassau and Suffolk counties, after the company had closed at least a dozen Waldbaum's and four Pathmark stores on Long Island from 2010 to 2014.
As the grocer bled cash in recent months, some vendors demanded faster payments and threatened to cut off supplies, A&P's financial advisory firm said in a court filing. The company's top goal in bankruptcy is to maintain daily deliveries of perishable inventory, such as eggs, butter and milk, FTI Consulting Inc. said.
It is "absolutely essential" that the grocer's "supply chain for inventory remains uninterrupted," FTI said.
In addition to Waldbaum's and Pathmark, A&P operates Food Emporium, Super Fresh, and Food Basics, as well as its branded stores. It has more than 300 locations, according to its website.
The company has struggled of late to compete with newcomers including Whole Foods Market Inc. and Trader Joe's Co. Its stores came to seem dated, and the company's bottom line sagged under labor expenses including high pension costs.
Sale agreements for 40 percent its stores, previously reached with Acme Markets Inc., Stop & Shop Supermarket Co. and Key Food Stores Co-operative Inc. will remain in place. The deals price 120 stores at about $600 million, A&P said in a statement Monday.
Agent for restructuring
Fortress Credit Corp. will be the agent for a $100 million loan backed by the 156-year-old grocer's assets to fund its restructuring, A&P said.
The Montvale, New Jersey-based grocer listed assets and debt of more than $1 billion each in its bankruptcy filing in New York. Among the largest unsecured creditors listed were C&S Wholesale Grocers and McKesson Drug Co., with a claim of $39.4 million.
A&P previously filed for bankruptcy in 2010, emerging in 2012 as a closely held company owned in part by Yucaipa.
A&P has two loans totaling $270 million, according to data compiled by Bloomberg. The loans, along with a $300 million revolving line of credit, mature in September 2019.
In addition to the senior loans, the company took on $420 million in junior-ranking debt as part of its exit from bankruptcy in 2012, according to court documents. At the time it had lost around $123 million on sales of almost $1.6 billion in its latest quarter, according to a regulatory filing.
Founded in 1859
A&P was founded in lower Manhattan in 1859 as a mail-order tea and spice business by merchants George Huntington Hartford and George Gilman.
Horse-drawn carts soon spread the business north, south and west, turning A&P into the largest grocer in the U.S. By 1929, the company had more than 15,000 stores and $1 billion in sales, and its Eight O'Clock Breakfast Coffee helped take the edge off Americans' morning grind.
The case is: in re The Great Atlantic & Pacific Tea Co., 15-23007, U.S. Bankruptcy Court, Southern District of New York, Manhattan. --with Aisha Al-Muslim