A&P files for Ch. 11 bankruptcy

Montvale, N.J. - The Great Atlantic & Pacific Tea Co. on Sunday filed for Chapter 11 bankruptcy protection as it struggles with enormous debt and increased competition from low-priced peers.

The 151-year-old company operates 395 stores around the Northeast under several banners, includingA&P, Waldbaum's, The Food Emporium, Super Fresh, Pathmark and Food Basics.

The filing was widely anticipated. A&P has been struggling in the red ink for some time. According to the filing submitted in bankruptcy court in White Plains, N.Y., the company listed total debts of more than $3.2 billion and assets of about $2.5 billion.

The supermarket operator reported revenue of $9.5 billion in 2008, which fell to $8.8 billion in 2009. In its most recent quarter, ended Sept. 11, A&P reported a net loss of $153.7 million and falling revenue.

The company said all of its stores are fully stocked and open for business and loyalty programs and other promotions will continue.

It also is struggling with pension costs, the weight of "dark" stores, where it has stopped operating but is still responsible for the lease and a contract with C&S Wholesale Grocers Inc., which provides the majority of its inventory, which it has been unable to negotiate down to lower costs.

According to the filing, A&P has secured $800 million in debtor-in-possession financing through J.P. Morgan Chase & Co. and will continue to focus on its turnaround plan while under bankruptcy protection. The company has brought in new management, sold 32 underperforming stores since this summer and drastically cut costs.

A&P is one of the oldest supermarket operators in the country. Germany's Tengelmann Group is its largest shareholder with about 42% of its stock. Activist investor Ron Burkle of the Yucaipa Cos. investment firm also is a large holder.