10:03 p.m. | Updated The Great Atlantic & Pacific Tea Company, the troubled supermarket operator, filed for bankruptcy protection on Sunday to reorganize its finances after suffering under its big debt load and from stiff competition.þþA.&P., whose stores include Pathmark and the Food Emporium in addition to its eponymous chain, is among the biggest Chapter 11 cases of the year, amid a relative dearth of major bankruptcy filings.þþIn documents filed in bankruptcy court in the Southern District of New York, A.&P. listed $2.5 billion in assets and $3.2 billion in debt as of Sept. 11.þþA.&P. has run losses for several consecutive quarters, including a $153.7 million loss for the three months ended Sept. 11. þþAmong the company’s more pressing problems, according to another court filing: It faced $13.4 million in interest payments due on Wednesday, and it had been unable to reach an agreement with C&S Wholesale Grocers, which supplies about 70 percent of A.&P.’s inventory.þþ“We have taken this difficult but necessary step to enable A&P to fully implement our comprehensive financial and operational restructuring,” Sam Martin, the company’s chief executive, said in a statement. þþSunday’s filing marks a low point for A.&P., once the nation’s dominant supermarket company. Founded in 1859 in New York City as a tea seller, A.&P. spread rapidly through the nation, operating as many as 16,000 stores.þþBut beginning in the 1970s, it began running into tougher competition, from regional chains to big-box retailers like Wal-Mart Stores and Costco, forcing a retrenchment. As of this year, it operated 395 stores along the East Coast. The company also suffered from the recession, which helped spur consumers to seek lower-priced groceries elsewhere.þþThe company, based in Montvale, N.J., has struggled in recent years, notably after buying Pathmark in 2007 for $679 million, a deal that left A.&P. with significant debt. þþOther supermarket chains, including Bi-Lo, have filed for bankruptcy in recent years.þþA.&P.’s filing came as little surprise, as the company’s prolonged financial difficulties prompted speculation about a potential bankruptcy filing. Shares in the company plunged 67 percent on Friday, to 93 cents, before trading in the stock was halted.þþThe company has secured an $800 million debtor-in-possession loan from JPMorgan Chase to keep operating under bankruptcy. It also named Frederic F. Brace, who helped run United Airlines’ bankruptcy filing, as its chief restructuring officer.þþAmong A.&P.’s biggest shareholders is Aletheia Research & Management, a money manager based in California that owns 27 percent of the company’s stock (and has recently come under regulatory scrutiny over its bookkeeping practices). þþAletheia gained notoriety for its tendency to invest alongside the supermarket mogul Ronald W. Burkle — who as Pathmark’s largest shareholder helped engineer its sale to A.&P. þþBarnes & Noble, in its effort to defend itself against a proxy challenge by Mr. Burkle, accused the billionaire of secretly teaming up with Aletheia to take control of the bookseller without paying a premium. Mr. Burkle and Aletheia denied the charge.þþMr. Burkle’s investment vehicle, the Yucaipa Companies, owns a 4 percent stake in A.&P.’s common stock, according to a bankruptcy court filing. Yucaipa also owns a significant amount of preferred shares, having invested in A.&P. last year.þþA.&P.’s major shareholders supported the company’s decision to file for bankruptcy, the retailer said in its statement.þþThe company’s largest unsecured creditor is Wilmington Trust, which is representing several classes of investors owning nearly $677 million in bonds.þþUnlike many other big debtors in recent years, A.&P. did not announce what is known as a “pre-arranged” or “prepackaged” bankruptcy filing, in which a company reaches some agreement with its creditors over a reorganization plan. Such filings tend to be shorter in duration, sparing companies time and potential legal headaches.þþA.&P. is being advised by Lazard and the law firm Kirkland & Ellis.þþþ
Source: NY Times
