Bankrupt A&P receives financing, bids; will close 25 stores

Montvale, N.J. – So far, chapter 11 bankruptcy appears to be going as planned for The Great Atlantic & Pacific Tea Company (A&P). A&P has received approval for financing from the U.S. Bankruptcy Court of the Southern District of New York, bids for some stores, and will close 25 stores in the near term due to “lack of interest” and ongoing losses.



As part of its approval of “first day motions” from A&P, the court has granted A&P immediate access to $50 million of $100 million debtor-in-possession (DIP) financing provided by Fortress Investment Group. This DIP facility will enable A&P to continue operating its stores and pay its suppliers, vendors, employees and others.



As previously announced, A&P will sell approximately 120 stores, and it will continue strategic sales through the chapter 11 process. All asset and store sales will be conducted through a court-supervised sale process. The sale process could include a possible credit bid from A&P’s current investors.



So far, the sale process has included a previously agreement to sell 25 stores in the greater New York area for $146 million to Stop & Shop. In addition, Acme Markets has entered into an agreement to acquire 76 A&P stores in Connecticut, Delaware, Maryland, New Jersey, New York, and Pennsylvania under the A&P, Superfresh and Pathmark banners for an undisclosed sum.



A&P has asked the court for an order requiring other bidders to submit their bids by Sept. 11, 2015, with an expectation that court approval for the sale of the stores would be received by Oct. 15, 2015. Kroger Co. is also reportedly interested in some of A&P's store locations under the Pathmark banner.



In other bankruptcy-related activity, A&P has named chief administrative officer Christopher McGarry as chief restructuring officer.



Aside from the 25 stores expected to close, A&P will continue to conduct business at its stores during the court-supervised sale process. These stores are fully stocked with a complete range of products, and all existing customer promotional and loyalty programs will stay in place.



“We are pleased that the court has granted these motions promptly, which allows us to continue operating in ordinary course during this process – continuing to pay employees, work with suppliers and serve customers,” said Paul Hertz, president and CEO of A&P. “We are confident that pursuing a sale process implemented through chapter 11 will enable us to preserve as many jobs as possible and ensure that we achieve the best possible outcome for all stakeholders.”



A&P’s legal representative in its chapter 11 cases is Weil, Gotshal & Manges LLP and its financial advisors are Evercore, FTI Consulting and Hilco Global.