A U.S. bankruptcy judge on Friday tentatively approved a proposal to terminate the retiree health- and life-insurance programs of Great Atlantic & Pacific Tea Co.
“Congress gave retirees as well as collective-bargaining units and their members special protection under bankruptcy laws,” said Judge Robert Drain in While Plains. “But Congress also set up mechanisms for modifying the benefits.”
About 400 former employees of the Montvale, New Jersey-based company’s stores, including Pathmark and Waldbaum’s, were guaranteed health benefits in retirement and about 1,200 were receiving life insurance. But the company sought to end the programs after filing for bankruptcy in July.
Some of the retirees’ benefits will stop at this end of the month, while others will cease on Jan. 1 or the end of that month. The life insurance offered a $1,500 death benefit, and claims will be honored through the end of January, an A&P lawyer said in court.
A&P will send out notices to retirees with information about the benefits, their termination, and advice on how the former workers can move to other plans.
A union official said the company in September had proposed ending the benefits immediately, after announcing in August that it planned to sell all its stores and go out of business. But negotiations led to continued payments, he said. Both sides’ said in court Friday they had managed to reach agreements ahead of Friday’s court session.
A&P, founded in 1859, operated nearly 300 stores, including 33 Waldbaum’s and 19 Pathmark stores on Long Island. Most were sold to other supermarket operators, which hired some of the laid off workers. But others closed and an estimated 2,000 of the workers on Long Island wound up without jobs.