Next Week in Bankruptcy

By Katy Stech
Wall Street Journal
July 24, 2015

Mel Evans/Associated Press

The A&P grocery chain is preparing to close about two dozen money-losing stores while searching for buyers to rescue its other locations throughout the Northeast.

On Monday, the supermarket’s bankruptcy lawyers will ask Judge Robert Drain for permission to shut down 25 stores, arguing that the locations drain the company of roughly $2.5 million every month, according to their request in U.S. Bankruptcy Court in White Plains, N.Y. The process of selling off the store’s assets could bring in $48 million–a much-needed infusion of cash, they added.

“No third-party…made or is likely to make a firm offer” for the stores, the company’s bankruptcy lawyers said in court papers. (Read which ones are on the chopping block here.)

The Montvale, N.J.-based grocery chain, formally called Great Atlantic & Pacific Tea Co., operates roughly 300 locations and filed for bankruptcy on Sunday, facing roughly $2.3 billion in debt.

In court papers, Chief Restructuring Officer Christopher McGarry said that the supermarket chain struggled to win customers despite temporary price reductions and heavy advertising after the company emerged from a 2012 earlier bankruptcy. The company resisted closing money-losing stores during that bankruptcy by negotiating cuts to labor and vendor cuts, but the effort wasn’t enough to make them profitable, he said.

Like other traditional grocery operators, A&P has lost ground to competitors like Wal-Mart Stores Inc., as well as dollar stores, convenience chains, and discount grocers like Aldi Inc. Meanwhile, specialty stores such as Whole Foods Stores Inc. have drawn more high-end customers.

In recent court papers, A&P officials said the 28,500-worker chain will try to cut labor costs even more while they look for buyers for its stores. Acme Markets Inc., Stop & Shop Supermarket Co. and Key Food Stores Co-operative Inc. have made an offer of nearly $600 million for 120 of the grocery chain’s stores–an offer that could draw others at an auction.

On Tuesday, lawyers for asset management adviser F-Squared Investments Inc. could get permission at a court hearing to sell the Wellesley, Mass., firm’s operations at an Aug. 19 bankruptcy auction.

The firm’s lawyers asked Judge Laurie Selber Silverstein to allow them to kick off the auction with an offer from a unit of Chicago’s Good Harbor Financial LLC. That unit offered to pay $5 million cash along with two years of earn-out payments, according to documents filed in U.S. Bankruptcy Court in Wilmington, Del.

F-Squared Investments filed for chapter 11 protection on July 8 after a dispute with the U.S. Securities and Exchange Commission prompted customers to flee.

In December, F-Squared Investments agreed to pay $35 million and admit wrongdoing to settle charges brought by the agency that it defrauded investors by falsely advertising the performance of its flagship portfolio of exchange-traded funds. F-Squared Investments acknowledged that it violated federal securities laws as part of the settlement, the agency said.

F-Squared Investments was only able to get insurers to pay for $10 million of legal fees that topped $17 million. Meanwhile, institutions controlling some $4 billion worth of investments left earlier this year, including major client Virtus Investment Partners Inc., an F-Squared Investments lawyer said in a recent court hearing.

Advocates for alleged clergy sexual-abuse victims connected to the Roman Catholic Archdiocese of St. Paul and Minneapolis want a judge to extend the deadline that alleged victims have to speak up.

On Thursday, Judge Robert Kressel will hear a request from the bankrupt archdiocese’s creditor committee to push back the current Aug. 3 deadline to May 25. Committee officials are asking alleged abuse victims to come forward and file so-called proof of claims against the archdiocese before that deadline, potentially enabling that victim to split a pot of settlement money of an undetermined amount.

Committee officials say archdiocese officials haven’t done a thorough job of informing the public of the Aug. 3 deadline by publishing notices in national, Catholic and local newspapers. While archdiocese officials say many parishes have mentioned the deadline in their weekly bulletins, creditors committee who analyzed bulletins published online found that 25 of 89 parishes failed to publish any notice in their online bulletins through the middle of June 2015.

The archdiocese filed for chapter 11 bankruptcy protection in January to halt several abuse-related lawsuits from going to trial. Since then, several hundred alleged abuse victims have come forward with claims against the archdiocese, according to victims’ lawyers.

The archdiocese is also facing criminal charges—an unprecedented maneuver—for its alleged role in endangering children.

-Peg Brickley, Joseph Checkler, Annie Gasparro and Tom Corrigan contributed to this article.








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