Grocer A&P to emerge from bankruptcy after plan approval

Some Chicago residents may be familiar with the Great Atlantic & Pacific Tea Co., which is the longer name for the grocery chain known more commonly as A&P. The company has a long history and can trace its origins back to the middle of the 19th century. Once a popular grocer, the company has fallen on hard times recently and filed for Chapter 11 bankruptcy in late 2010.

After much debate among creditors, A&P's business reorganization plan has been approved by a Bankruptcy Court Judge, and the company can now exit bankruptcy proceedings. At times, there was some doubt over whether the plan would be approved, and the company faced the prospect of Chapter 7 liquidation.

Before filing, A&P had been burdened by escalating costs and labor issues. The company has already had to close a number of underperforming stores and reduce its workforce by one-eighth. But the grocer has created new contracts with the unions that represent its workers. Its employees agreed to take cuts to benefits and wages in exchange for keeping the remaining stores open and operating.

With the approval of the bankruptcy plan, A&P will be a stronger and trimmer company. It has received a new round of financing from investors and will be on a schedule to repay some of its creditors. Under the plan, unsecured creditors, those who loan money without obtaining an interest in the debtor's property, will see no money, at least for the time being.

A&P's business reorganization shows how bankruptcy can offer a struggling business the opportunity to get back on its feet and return to a competitive position in its sector.

Source: FOXBusiness.com, "Judge Confirms A&P's Plan To Exit Bankruptcy Proceedings," Feb. 27, 2012.

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