With the economy failing all over the United States in the recent years and the economic downfall of many businesses, it doesn’t seem surprising to hear that companies are filing for bankruptcy and bankruptcy protection. However, it does seem odd that a company that has been in business for over 150 years and has been established as one of the largest in their industry at one time should have to do the exact same thing. Recently, A&P Grocery filed for chapter 11 bankruptcy to protect the business that they have excelled in for many years.
The Greater Atlantic and Pacific Tea Company was founded in 1859 by George Huntington Hartford and George Gilman and currently has headquarters in Montvale, New Jersey. This company operates 395 stores in 8 states and the District of Colombia under 6 brand names. The company operates as A&P, Waldbaum’s, The Food Emporium, Super Fresh, Pathmark, and Food Basics and employs over 40,000 employees.
For the past couple of years, the company has reported falling revenues each year and that along with higher operating costs has led to the company filing chapter 11 bankruptcy earlier this month in White Plains, New York. The company reported revenues of 9.5 billion dollars in 2008 and revenues of 8.8 billion dollars in 2009. This year the company has reported that they have assets of 2.5 billion dollars with debts that total over 3.2 billion. Any one that can do basic math knows that these kinds of numbers make for bad business operations.
A&P Grocery was once known as being the largest grocer in the United States and had a reputation as one of the best grocers in the business. However, the current recession that the United States has been in has wreaked much havoc on many businesses including those who have been in business for a long time. Many smaller businesses are finding that it is harder to compete in the market than it was a few years ago and that many of the bigger chain stores can get better deals on merchandise and offer lower prices than some of the small companies that have been in business for years.
Filing for bankruptcy protection is one step towards a major reconstruction plan that the company has put forth in order to keep employees working and keep their financial wealth. JP Morgan Chase has announced that they will provide 800 million dollars in DIP financing to aid in the restructuring of the company. This will allow employees to continue to be paid, benefits to continue and will give the company operating money while they are working to increase their strength in the grocery business.
Recently, A&P announced that they were planning to begin a turn around plan that would allow them to restore their financial health and allow them to operate on a more even playing field with other companies in their industry. This plan will be lead by Chief Administrative Officer Frederick F. (Jake) Brace and will include a completely new management team, a reduction of operating costs, an improvement to the values customers receive and an improvement of all customer service. During this reconstruction plan all stores will remain open and fully stocked and will keep all employees working and safe from unemployment. The shareholders of the company agree that this plan is necessary and fully support the company in this decision.
This filing shows that seniority in an industry or in a business do not have any purpose in our current economic situation. Whether a company has been in business a week or a decade, nothing guarantees that they will be open tomorrow. A&P has done what is necessary for their business and their employees as many companies have done. Will they be able to further operate in the economy now is just a matter of time, but for now they are willing to take some risks and make some changes that should aid in a better future for the company.