A&P Wants Claims Disallowed As Duplicative, Inconsistent With Reorganized Company

by Tara Arick on March 29, 2013 · 0 comments

in Bankruptcy

- From LexisNexis® Mealey’s™ Daily Legal News.

Bankrupt grocer The Great Atlantic & Pacific Tea Co. Inc. (A&P) on March 27 filed a brief in the U.S. Bankruptcy Court for the Southern District of New York objecting to certain proofs of claim and contending that they should be disallowed (In Re: The Great Atlantic & Pacific Tea Company Inc., No. 10-24549, Chapter 11, S.D. N.Y. Bkcy.).

A&P filed for Chapter 11 bankruptcy in 2010.

$ 52 Billion In Claims

The company argues that after it filed for bankruptcy, more than 10,000 proofs of claim were filed against it, asserting more than $ 52 billion in aggregate liabilities.

A&P contends that through negotiations it has been able to resolve nearly half of those original claims. At present, 5,500 remain outstanding, the company says.

A&P argues that so-called “No Liability Claims,” which the company argues consist of asserted priority claims that have already been paid in part and are otherwise inconsistent with A&P’s reorganized books and records, should be disallowed.

Recovery ‘Unwarranted’

The failure to disallow and expunge the “No Liability Claims” would result in the relevant claimants receiving an unwarranted recovery from the reorganized version of A&P, the company says.

A&P also argues that there are other claims that should be adjusted because the company has paid a portion of the asserted claims in question.

Additionally, the company maintains that there are a variety of duplicative claims.

Specifically, Wilmington Trust Co., as indentured trustee, filed a claim on behalf of holders of A&P’s 6.75 percent convertible senior notes due 2012, a claim on behalf of holders of A&P’s 9.375 percent unsecured quarterly interest bonds due 2039 and a claim on behalf of holders of the A&P’s 9.125 percent senior notes due 2011.

Claims Duplicative

A&P argues that the bar date order issued by the Bankruptcy Court contemplated that the indenture trustee would file the remaining trustee claims to cover the debt claims held by A&P’s prepetition bondholders and in so doing would relieve those holders of the need to file an individual proof of claim.

Thus, the company maintains, there was no need for the holders of the duplicative claims to file those claims once the indenture trustee filed the remaining trustee claims.

A&P is represented by James H.M. Sprayregen, Paul M. Basta, Ray C. Schrock and Craig A. Bruens of Kirkland & Ellis in New York.

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