Collapsing under the weight of mounting debt and fierce competition from discounters, grocer Greater Atlantic & Pacific Tea (NYSE:GAP), better known as A&P, filed for Chapter 11 bankruptcy protection over the weekend.
The Montvale, N.J.-based grocery store chain operator listed total debts of more than $3.2 billion in its bankruptcy filing.
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A&P, which also operates SuperFresh, Food Emporium and Pathmark Stores, said its 395 stores will continue to operate and are “fully stocked.”
To keep afloat during bankruptcy proceedings, A&P reached a deal with JPMorgan Chase (NYSE:JPM) to receive $800 million in debtor-in-possession, or DIP, financing.
“While we have made substantial progress on the operational and merchandising aspects of our turnaround plan, we concluded that we could not complete our turnaround without availing ourselves of Chapter 11,” A&P CEO Sam Martin said in a statement. “It will allow us to restructure our debt, reduce our structural costs, and address our legacy issues.”
A&P tapped Frederic Brace, its chief administrative officer and a former executive at United Airlines parent UAL Corp., to lead the company’s restructuring effort.
The company said it expects to receive full authority to pay employee wages and benefits on an uninterrupted basis.
A&P has been slammed by heavy competition from discount giants Target (NYE:TGT) and Wal-Mart (NYSE:WMT). Its store total has plunged over the years as it operated 16,000 stores in the 1930s but today runs fewer than 400, Bloomberg News reported.
A&P’s stock plummeted 66% on Friday in the wake of reports that indicated the company was mulling a Chapter 11 filing.