MONTVALE, N.J. — Labor unions representing workers at A&P last week moved closer to a settlement with the retailer while a judge overseeing the retailer's Chapter 11 bankruptcy case set a Dec. 15 date to vote on a plan of reorganization.
A new labor deal — or a renegotiation of current contracts — is crucial to the proposed $490 million offer to take A&P out of bankruptcy early next year. Around 92% of A&P's employees are represented by one of 34 collective bargaining agreements. Sources said the company was seeking $125 million in annual cost savings from labor.
The United Food and Commercial Workers union last week was to have submitted a confidential proposed settlement to the bankruptcy court. Late last week, the UFCW said its members would vote on the deals between Nov. 27 and Nov. 29.
In a disclosure statement filed with its plan of reorganization last week, A&P said it was seeking a Feb. 6 hearing to approve its emergence from Chapter 11. It named 15 classes of creditors, saying that four groups would be paid in full, with others sharing a $40 million pool for unsecured creditors.
The disclosure statement acknowledged that A&P was in negotiations with holders of its convertible notes on a possible transaction to exit bankruptcy before Yucaipa Cos. presented an alternative plan in late October. Those groups eventually submitted a joint bid early this month.
A&P acknowledged the Yucaipa bid would be advantageous because it was likely to garner the support of its unions and because Yucaipa's experience in the supermarket industry would benefit its post-bankruptcy operations. Yucaipa had initially proposed to separately buy certain assets from A&P concurrent with its investment, but that request was dropped as part of the joint negotiations.
