The Great Atlantic & Pacific Tea Company Inc., which controls the A&P supermarket chain, filed for Chapter 11 bankruptcy protection on Monday and will be closing 25 stores. This marks the second Chapter 11 bankruptcy for the 156-year-old A&P chain in the last five years after emerging from court with the help of investors, including Ron Burkle, founder of Yucaipa Companies, according to Newsday.
The company has lined up tentative deals with Acme Markets Inc, owner of Safeway and Albertsons grocery stores, Shop & Shop Supermarket Co LLC and Key Food Stores Co-operative Inc. to buy its assets for nearly $600 million.
Without the proposed sales, A&P would have "no choice but to liquidate their business in a fire sale and piecemeal fashion," Great Atlantic & Pacific Tea Co. chief restructuring officer Christopher McGarry said in the filing, according to USA Today.
The company currently faces issues on two fronts. On one hand it has been unable to stand up to the parent companies of grocery store behemoths such as Wal-Mart and Costco, who entice customers with big discounts. On the other, wealthier shoppers have been lured away by higher-end stores such as Whole Foods, Reuters reports.
Great Atlantic & Pacific Tea Company Inc., which has about 300 stores and 34,000 employees, was founded in 1859 by tea and spice merchants George Huntington Hartford and George Gilman. At first, the company was a as a mail order business. Later that year, its first store-warehouse operation was opened in New York City, according to Reuters.
