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Bankrupt A&P Seeks to Forgo Workers’ Bumping Rights, Full Severance

After failing to come to terms with labor unions representing its workers in various geographic markets, the Great Atlantic & Pacific Tea Co. (A&P) has asked the judge overseeing its Chapter 11 bankruptcy proceedings to set aside two key union provisions – bumping rights and full severance pay – according to published reports. Other news outlets have also reported that the Montvale, N.J.-based chain has sent layoff notices to employees at all 297 of its stores, which it still hopes to sell, with the exception of 25 locations it's seeking to close as soon as possible.

A&P said that the administrative burden and costs of bumping rights, which allow long-term employees of a company to take the positions of workers with less seniority, are too high, as well as undesirable to potential bidders for its stores, according to Westchester County, N.Y.’s Journal News. As for severance, the company offered to pay employees who lose their jobs through the bankruptcy 25 percent of what they’re entitled to, with a maximum cap of $10 million for all associates. A&P would pay the rest of the severance at a later time, depending on what's left after the stores are sold off, and what the company's other creditors are owed.

Acme Markets, Stop & Shop and Key Food have each offered to buy a combined 118 stores, but, according to A&P, those offers don't include union provisions like bumping rights and the assumption of pension plans.

'Certain Deathblow'

In the court documents, the grocer said it would be "a certain deathblow to the hopes of an orderly Chapter 11 liquidation" if those bids were to fall through – an estimated potential loss of $213 million – deterring other possible buyers from making offers. Further, the threat of bumping would probably drive down bid prices, "as potential purchasers would not know with any certainty what they would be buying or whom they would employ," the company noted.

Earlier this week, U.S. Bankruptcy Judge Robert Drain warned the large number of potential bidders against colluding with each other to fix prices for stores they offer to buy.

A hearing on the issue is slated for Monday, Aug. 17 in U.S. Bankruptcy Court in White Plains, N.Y.


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