Bankrupt A&P Seeks to Slash Severance So It Can Pay Creditors
A&P, the struggling grocery store chain liquidating under Chapter 11, asked a judge on Wednesday for permission to slash employees' severance by up to 75 percent -- so it can pay its corporate creditors more.
If approved, the brutal reduction would result in employees with 40 years of dedicated employment at the once-thriving grocer seeing their severance cut to $3,000 from $12,000, according to a workers' union rep.
Workers with less time on the job would get even less, according to John Niccollai, head of Local 464A.
Severance will be paid to workers at A&P stores -- as well as its Pathmark, Waldbaums and Food Emporium stores -- that are not sold as part of the liquidation process.
A&P also asked Bankruptcy Court Judge Robert Drain for permission to toss so-called union "bumping rights" -- the requirement that companies buying its stores hire employees on a seniority basis.
The severance payments and "bumping rights" (which forces the buyers to hire the most expensive workers) are making it difficult to sell its 300 stores and to pay its creditors what they are owed, A&P said in court papers.
"A&P is saying, in effect, 'If we pay the union everything we owe it, we wouldn't have enough money to pay others -- like vendors,'\0x2009" Niccollai told The Post.
"It's a question of who gets paid," he said. A&P workers get severance of $300 for every year they worked at the chain.
A&P expects to sell 118 stores to Stop & Shop, Acme Markets and Key Food. Another 25 stores will be closed.
The remaining 157 stores are to be sold by Oct. 7 -- but had no known takers as of Wednesday, according to court papers.
Drain, who presided over A&P's bankruptcy five years ago, will rule on A&P's severance pay cuts and the "bumping rights" request at a hearing scheduled for Aug. 17.
At one Brooklyn Waldbaum's, a department manager, who did not want to be identified, is very concerned about a potential cut to his severance payout.
"I have 39 years on the job, and I may not get my full pension if my store is not sold," he said.
"Some of my friends at stores that have been bought don't know what they'll be paid and whether they'll get their jobs at all," said the Waldbaum's manager.
Union officials are still negotiating several other key issues with A&P, including whether members whose stores are bought will get the same pay and benefits they currently have and whether UFCW will continue to represent them, Niccollai said.