Grocery Chain A&P’s Financial Meltdown Could Leave Thousands of Union Workers Jobless

Bruce Vail July 22, 2015

A&P intends to close as many as 25 stores around the northeast immediately.

Plans to dis­mem­ber the A&P super­mar­ket chain were revealed in a fed­er­al bank­rupt­cy court in New York this week, with dire results pre­dict­ed for more than 15,000 mem­bers of the Unit­ed Food and Com­mer­cial Work­ers (UFCW) union. 

The his­toric gro­cery retail­er — the orig­i­nal Great Atlantic & Pacif­ic Tea Co. was formed back in 1859 — intends to sell or close all of its 300 stores spread across six Mid-Atlantic states, accord­ing to doc­u­ments filed Mon­day in the U.S. Bank­rupt­cy Court for the South­ern Dis­trict of New York. The plan will affect every one of an esti­mat­ed 30,000 UFCW mem­bers cur­rent­ly employed with the com­pa­ny, with more than half of those in real dan­ger of los­ing their jobs soon, union offi­cials say. 

The bad news for the union was par­tial­ly tem­pered with the announce­ment that A&P had already lined up the sale of 120 of its stores to oth­er region­al gro­cery chains that also have UFCW con­tracts. If those sales go for­ward as planned, most of the 12,500 union mem­bers at those 120 stores would be expect­ed to retain their jobs under the new own­ers. The prospec­tive buy­ers — ACME Mar­kets, Ahold USA (oper­a­tor of Stop & Shop) and Key Food — already have UFCW col­lec­tive bar­gain­ing agree­ments cov­er­ing the 120 stores in Penn­syl­va­nia, New York and New Jer­sey (A&P stores are also locat­ed in Con­necti­cut, Delaware and Maryland).

But those plans don’t include any future employ­ment for work­ers at the oth­er 180 stores, includ­ing 25 that A&P says it will seek to close imme­di­ate­ly. All sales or clo­sures are sub­ject to approval by Bank­rupt­cy Court Judge Robert Drain, and the process of sell­ing off or clos­ing stores is expect­ed to begin soon but drag out for months. ACME Mar­kets, for exam­ple, issued a state­ment say­ing that it didn’t expect to final­ize pur­chase of any A&P stores until mid-October. 

Very few union mem­bers were tak­en by sur­prise by these devel­op­ments, says Wen­dell Young IV, Pres­i­dent of UFCW Local 1776 in Philadel­phia. A&P, which also oper­ates under the trade names of Path­mark, Wald­baums and Super­fresh, has been ail­ing finan­cial­ly for years, he says, and under­went a painful bank­rupt­cy reor­ga­ni­za­tion in 2010 – 2012.

I’ve been telling my mem­bers for two years that I didn’t think A&P was going to make it. We’ve been doing every­thing we can as a union to be pre­pared for this,” he tells In These Times.

The final demise of A&P was sig­naled last Sep­tem­ber, Young con­tin­ues, when com­pa­ny exec­u­tives announced a debt refi­nanc­ing pack­age that failed to include any new invest­ment in the com­pa­ny. Rumors swept the super­mar­ket indus­try soon after­wards that exec­u­tives were intent on dis­mem­ber­ing the com­pa­ny by sell­ing off its valu­able pieces, and dis­card­ing the rest, he says.

Young adds that part of the union prepa­ra­tion has been to revive a coali­tion of 12 sep­a­rate UFCW locals with A&P con­tracts. Sup­port­ed by legal experts and finan­cial resources from the UFCW Inter­na­tion­al head­quar­ters in Wash­ing­ton, D.C., the coali­tion was first formed in 2010 to present a unit­ed labor front in deal­ing with bank­rupt­cy issues at that time. The coali­tion ceased active oper­a­tion when A&P emerged from the first bank­rupt­cy pro­ceed­ing in 2012, but was revived in June as a cri­sis at A&P appeared immi­nent, Young says. UFCW Local 1500 in New York, with about 5,000 mem­bers employed with A&P, is one of the coali­tion mem­bers most affect­ed by the bankruptcy. 

UFCW Region 1 Direc­tor Tom Clarke, who heads the coali­tion, did not respond to In These Times calls seek­ing addi­tion­al infor­ma­tion and comment. 

Christo­pher McGar­ry, A&P’s Chief Admin­is­tra­tive Offi­cer, began the bank­rupt­cy process by threat­en­ing the unions. In a dec­la­ra­tion dat­ed July 19 and filed with the court July 20. McGar­ry warned:

It is imper­a­tive that the par­ties coop­er­ate with one anoth­er and that nego­ti­a­tions be con­duct­ed as expe­di­tious­ly as pos­si­ble. While the Debtors are com­mit­ted to pur­su­ing con­sen­su­al res­o­lu­tions with their unions where pos­si­ble, if con­sen­su­al res­o­lu­tions can­not be quick­ly achieved with­in the required dead­lines imposed…the Debtors will be required to com­mence pro­ceed­ings under sec­tions 1113 and 1114 of the Bank­rupt­cy Code to seek author­i­ty to imple­ment both tem­po­rary and per­ma­nent mod­i­fi­ca­tions to the CBAs on a uni­lat­er­al basis.

Sec­tion 1113 is the sec­tion of the bank­rupt­cy code com­mon­ly used to can­cel or revise labor con­tracts, even with­out any agree­ment from unions or union members.

The coali­tion will resist any attempts by A&P to use bank­rupt­cy law to can­cel exist­ing UFCW col­lec­tive bar­gain­ing agree­ments. If the process is to be the order­ly sale or clo­sure of all the stores, then there is no need to can­cel any con­tracts. The union is ful­ly pre­pared to nego­ti­ate decent con­tracts with any of the new own­ers, and in the case of store clos­ings, the exist­ing con­tracts should be hon­ored by all the par­ties,” Young says.

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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