December 13, 2010 12:32 PM

Kirkland at Counter as A&P Checks In to Chapter 11

Posted by Brian Baxter

One of the largest grocery chains in the U.S., The Great Atlantic & Pacific Tea Company, filed for bankruptcy on Sunday night in White Plains, N.Y. The Chapter 11 filing affects all A&P, Pathmark, Waldbaum's, Food Emporium, Food Basics, and Super Fresh stores operating under the A&P umbrella.

Kirkland & Ellis restructuring partner Paul Basta, who joined the firm's New York office in September 2006 from Weil, Gotshal & Manges, is advising A&P in its bankruptcy case. Reuters reported on Friday that A&P had hired the firm for restructuring counsel. Kirkland partners James Mazza, Jr., and Ray Schrock are also advising the debtor. The firm has not yet filed billing statements with the bankruptcy court.

According to A&P's 24-page bankruptcy filing, the Montvale, N.J.-based company has assets of $2.5 billion against liabilities of $3.2 billion. Bloomberg reports that A&P has secured $800 million in debtor-in-possession financing and that all of the company's 395 food stores in eight eastern U.S. states are expected to remain open.

Germany's Tengelmann Group, a holding company that controls many large European grocery chains and food retailers, owns 41 percent of A&P. Billionaire Ronald Burkle's Yucaipa Companies also owns a sizable stake in the debtor. The New York Times reports that A&P has posted losses for several consecutive quarters, including a $153.7 million loss for a three-month period ending on September 11.

A&P acquired rival Pathmark Stores in March 2007 for $1.4 billion. Cahill Gordon & Reindel and Axinn, Veltrop & Harkrider served as counsel to A&P on that deal, while Cravath, Swaine & Moore advised Tengelmann. Latham & Watkins represented Pathmark.

Christopher McGarry serves as A&P's general counsel.

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