The Great Atlantic & Pacific Tea Company, Inc. announced that it has executed asset purchase agreements covering approximately 120 stores at a purchase price of approximately $600 million. A&P filed a voluntary petition under Chapter 11 of the U.S. Bankruptcy Code with the U.S. Bankruptcy Court for the Southern District of New York (the “Court”).

The company currently operates 296 stores under the brand names A&P, Best Cellars, Food Basics, The Food Emporium, Pathmark, Superfresh and Waldbaum's. All asset and store sales will be conducted through a Court-supervised sale process, subject to Court approval and certain other conditions. The sale process could include a possible credit bid for certain assets to be purchased by A&P’s current investors.

A&P will continue to conduct business and serve customers at its stores during the Court-supervised sale process. A&P has decided, however, that it will close 25 stores in the near-term due to lack of interest and significant ongoing store operating losses. The open stores are fully stocked with a complete range of high quality products, and all existing customer promotional and loyalty programs will stay in place during this process.

The company also announced that it is seeking Court approval to enter into a $100 million debtor-in-possession (DIP) financing agreement with Fortress Investment Group. A hearing to approve the DIP facility has been scheduled for July 20, 2015. Upon approval, this facility will enable A&P to continue operating its stores, pay its suppliers, vendors, employees and others in the ordinary course of business.

The company also announced that it has named Christopher McGarry Chief Restructuring Officer, effective July 19, 2015.

“After careful consideration of all alternatives, we have concluded that a sale process implemented through chapter 11 is the best way for A&P to preserve as many jobs as possible, and maximize value for all stakeholders,” said Paul Hertz, President and Chief Executive Officer of A&P. “The interest from other strategic operators has been robust during the Company’s sales process to date, and we have every expectation that will continue in chapter 11. And while the decision to close some stores is always difficult, these actions will enable the Company to refocus its efforts to ensure the vast majority of A&P stores continue operating under new owners as a result of the Court-supervised process. We greatly appreciate the continued support of our customers, suppliers and employees, who have maintained an unwavering commitment to our business and our customers.”

The company’s legal representative in its Chapter 11 cases is Weil, Gotshal & Manges LLP and its financial advisors are Evercore, FTI Consulting and Hilco Global.