A&P Ramps Up Closure Process By Rejecting Leases Of 48 Units
With about 90 stores yet unsold, A&P has begun to accelerate its wind down process by rejecting 48 leases and engaged the services of A&G Realty Partners, a Melville, NY-based commercial real estate firm, to act as a third party sales agent. As a part of that proposed deal, A&P will receive an upfront fee, be relieved of rent payments and split the proceeds of any store sales with A&G (there are other closed A&P stores that are not part of the A&G deal). A&G describes itself as a firm that specializes in real estate dispositions, lease restructurings, facilitating growth opportunities, valuations and acquisitions, adding that its clients include some of the nation’s most recognizable retail brands in healthy and distressed situations.
By rejecting leases, A&P is essentially abandoning those properties which will most likely fall into the hands of the stores’ landlords who theoretically can make a direct deal with any interested party without court approval or unionized affiliation.
Originally, A&G last month agreed to handle the potential sales of 55 A&P units, but the long Island based real estate firm, based on lease considerations, advised A&P to reject 45 of those leases. Three other stores were rejected earlier for different reasons. Most of the remaining stores that A&G will attempt to sell are in the Metro NY market. A&P closed all of its remaining stores on November 25 last year.
In a separate request, A&P has also asked the bankruptcy court to approve sales of 10 currently sub-leased stores to other non-grocery operators, including TJX Companies and Big Lots. The retailer said that deal would raise about $28 million for its creditors.
And on December 21, A&P asked the Bankruptcy Court to reject the lease of its Montvale, NJ headquarters where it ran the company for more than four decades after relocating from Manhattan.
During the past six weeks, the U.S Bankruptcy Court in White Plains, NY approved A&P’s request for a two-month extension of its Chapter 11 bankruptcy status, a procedural move seen as giving the defunct retailer time to sell more stores and provide added capital for its creditors. A&P’s Chapter 11 status will now continue until March 16 (with the approval process set for May 16). It is ultimately expected to convert its bankruptcy to Chapter 7 liquidation. While there hasn’t been much store movement over the past 30 days, the last remaining unsold Food Emporium store (on E. 59th Street in Manhattan) was purchased (pending court approval) by real estate firm D2D Bridgemarket LLC for $4 million. Additionally, Key Food’s $1.75 million bid for the name and intellectual property rights for the Food Emporium brand was approved by the Court. Another metro New York independent, PSK/Foodtown (Allegiance), is awaiting court approval for its $1 million offer for the Pathmark name and other intellectual property assets related to that brand.
A&P is also aggressively pursuing bidders who made successful offers for stores at one of two auctions that were held in October, but failed to complete those transactions. The now nearly defunct 156-year-old company sued real estate firm Lee & Associates in November for failing to disclose it had made two winning offers for stores on behalf of an unqualified bidder. Lee & Associates, a large commercial real estate firm, outbid Bogopa (Food Bazaar) for a Food Basics store in North Bergen, NJ and a Pathmark unit in Brooklyn (offering $6.8 million and $5 million respectively). It was later disclosed that Lee was reportedly bidding for Francisco Gin, who operates several metro New York stores under the Golden Mango banner. A&P alleges that Gin was not financially able to qualify as a bidder and was not identified as a bidder by Lee & Associates. when it made bids for him. The Tea Company is seeking at least $1.8 million in damages from Lee, its president James Wacht and Gin. Bogopa was ultimately granted approval to acquire those two units.
Last month, A&P filed three more lawsuits for similar alleged violations. It is suing Millwood Merchant LLC for $2.4 million, whose representative, Ruben Luna, failed to complete a deal for an A&P store in Millwood, NY.
Shanghai Enterprises is also being sued by A&P for $1.2 million for failing to close on a deal for an A&P unit in Hastings-on-Hudson, NY that it gained control of at auction. Foodtown operator Estevez Markets, which acquired another A&P at auction in Old Tappan, NJ, has made a reported $200,000 offer for the store, far less than Shanghai’s $928,000 winning bid (minus inventory).
K.A.M. Foods is also under A&P’s legal watch for failing to complete the purchase of a Waldbaums store on Staten Island (Tottenville) and a Pathmark supermarket also on Staten Island.
Another bankruptcy hearing is scheduled later this month.