Friday, Sep 25, 2015, 5:10 pm
Even the Wall Street Journal Smells a Rat in A&P Supermarkets Bankruptcy
Workers at the bankrupt A&P grocery chain have been complaining for weeks that corporate executives have been looting the failing company, but nobody seemed to be paying much attention until Wall Street’s favorite newspaper came out with a story backing up the workers’ charges.
Wall Street Journal reporter Peg Brickley uncovered part of the truth September 18, with a dispatch that revealed A&P “paid out $9.4 million in bonuses and other extra payments to insiders in the 12 months before its July bankruptcy. Brickley’s story, based on documents filed in federal bankruptcy court, detailed that these payments were made to just eight A&P business executives, and that the company had taken the unusual step of concealing the names of the insiders who took the money.
Brickley’s report came just as the first wave of A&P store closures hit areas of New York, New Jersey and Pennsylvania, with about 2,500 grocery workers losing their jobs. The news had special impact for those union workers who had their contractual severance benefits cut by about half by order of Judge Robert Drain of the U.S. Bankruptcy Court for the Southern District of New York. Judge Drain ordered the cuts at the request of senior A&P managers, who had complained that the worker severance would be too costly for the company.
The sweetheart payments to A&P executives just adds insult to injury, sources at the United Food & Commercial Workers (UFCW) union say, as 15,000 or more union members are expected to lose their jobs this year as the company sells or closes its 300 stores spread out among six Mid-Atlantic states. Firm numbers on job losses are hard to pin down right now, according to UFCW, because an undetermined number of stores are expected to remain open under new ownership. At the time of the July bankruptcy filing, A&P stated it had 28,500 employees and that it expected that about 12,500 jobs could be saved by the pre-arranged sale of about 120 stores to other grocery chain operators.
Relations between the union and A&P managers have deteriorated steadily since the bankruptcy court filing, says Harvey Whille, President of UFCW Local 1262 in Clifton, New Jersey. The company received bankruptcy court permission to cut severance benefits for the first wave of the store closings, he tells In These Times, and is now back in court seeking permission to cut benefits for the rest of the employees who will lose their jobs
“Now, we have no future,” with A&P, Whille says, and the union expects to go to court in October to fight any further cuts. Asked whether he expected Judge Drain to continue to rule in A&P’s favor against the union workers, Whille replies, “I expect the judge to move in that direction.”
The judge did just that in a legal fight over a proposal by A&P to spend another $5 million for a “Key Employee Retention Program,” or KERP, Whille says. The $5 million was to be divided among about 500 non-union managers and staff for the purpose of providing an incentive for those people to remain on the job till December, when those jobs too will be eliminated. “They just keep saying ‘Line my pockets’ some more,” Whille comments.
After loud objections from UFCW and the Service Employees International Union (which has a small collective bargaining unit at A&P), Judge Drain allowed the KERP payments to go forward, although he reduced the amount to $3.9 million.
All of this legal activity at the courthouse has been taking place as Judge Drain has been receiving scores of letters from displaced workers complaining about unfair treatment. Typical is this from Theresa A. Brown, an employee at the A&P-owned Pathmark store is Aston, Pennsylvania:
A&P has successfully completed what they set out to do; Bankrupt Pathmark stores and weaken the unions. The company tells the court that its payroll was unsustainable but they did not tell you that we associates 3 years ago gave in to concessions to help rebuild the company. We gave back 7.5% of our income, no raises for 5 years. 1 week vacation, 3 personal holidays and 2 paid holidays. Which came to over $625 million! What did they give up? NOTHING! Then they have the nerve to petition the courts for $5 million for them to pay non-union associates to retain them. REALLY!
So they want to give raises to all the people who made the bad decisions that is causing this once GREAT company to be forced into BANKRUPTCY! They were the ones who raised prices to such outrageous amounts that forced our loyal customers and associates to shop elsewhere. I did price changes one day and they increased a box of trash bags by $5 a box making them $15.49 a box….
So I am asking Honorable Judge Drain not to give in to A&P request.
UFCW Local 1262’s Whille says he believes the union-sponsored letter writing campaign, in addition to extensive courtroom counterattacks from UFCW lawyers, have been effective in winning some gains for union workers. A&P, for example had asked Judge Drain to cut severance payments to union workers to only 25 percent of the contractual amounts, but he settled on 52 percent as a fairer number.
“It’s not as much as it should be, but we’re fighting for every inch,” he says. Those efforts notwithstanding he estimate that the central New Jersey local will lose about 1,200 members when the A&P bankruptcy plan is complete.
Bruce Vail is a Baltimore-based freelance writer with decades of experience covering labor and business stories for newspapers, magazines and new media. He was a reporter for Bloomberg BNA's Daily Labor Report, covering collective bargaining issues in a wide range of industries, and a maritime industry reporter and editor for the Journal of Commerce, serving both in the newspaper's New York City headquarters and in the Washington, D.C. bureau.
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