A&P Can Limit 'Bumping' of Workers, Should Pay More Severance

The Great Atlantic & Pacific Tea Co. (A&P) received permission this week from the judge overseeing its Chapter 11 bankruptcy process to place restrictions on seniority "bumping" rights at 25 stores slated to close by the middle of next month, but was also told it should pay higher severance pay to workers at those locations, according to a published report.

Responding to unionized workers' dissatisfaction with A&P's failure to adhere to labor contracts, U.S. Bankruptcy Judge Robert Drain noted that "bankruptcy as a whole is about broken promises."

Although the hearing dealt only with associates at the 25 stores A&P wants to close immediately, an attorney for the Montvale, N.J-based company told The Bergen County Record that it plans to request that the bankruptcy court override the grocer's union contracts to make it easier to sell off its stores.

Cost-neutral Stipulation

Drain directed the various locals of the United Food and Commercial Workers to come up with plans to place laid-off workers in jobs at other stores. To date, only Philadelphia-based Local 1776 has presented such a plan, which has been approved by the judge. The plan abides by Drain's stipulation that bumping should be cost-neutral – that is, that laid-off workers must accept the same wages and benefits of the junior employees they replace. Other locals told the newspaper that their contracts don't permit that.

The judge further recommended that A&P pay laid-off associates at the 25 closing stores 52 percent of their owed severance upon termination, with workers getting up to another 10 percent if enough money remains after the bankruptcy is completed. A&P originally wanted to pay 25 percent, and then upped its offer to 50 percent, with the proviso that associates agree to waive their right to more payments. According to Drain, no waiver should be required and the increase should be to 52 percent. A&P's lenders, both secured creditors and debtor-in-possession lenders, must OK the higher severance.

A&P filed for Chapter 11 bankruptcy protection in July with the U.S. Bankruptcy Court for the Southern District of New York. Three regional rivals — Stop & Shop, Acme Markets and Key Food — have put in bids for 118 of the company’s 301 stores, and the grocer is looking to sell off the rest of the locations.