For a limited time, you can get BOTH new Marketplace Sock designs for only $5/month.
Don’t wait – this special offer ends soon!
Call Monday “Debt Relief Day.” Two troubled entities are getting debt relief payments. The first: Greece received $7.75 billion from the European Financial Stability Mechanism and promptly made payments to the European Central Bank and the International Monetary Fund. The second debtor is closer to home: the storied grocery chain Great Atlantic & Pacific Tea Company, or A&P, which received a $100 million loan as part of its bankruptcy filing.
Bankruptcies often start with these “debtor-in-possession financings,” says Peter Gilhuly, with the law firm Latham & Watkins. The money is meant to fund the company through the bankruptcy process.
“When you have your biggest trouble, you’re getting a lot of money to allow you to restructure, or in A&P’s case, to liquidate efficiently,” he says.
Like Greece’s latest proposed bailout, Gilhuly says this money is supposed to be a bridge, part of path forward guided by the U.S. bankruptcy code.
But because there isn’t a bankruptcy code for countries, Greece’s process is more unpredictable, says Lee Buchheit, a partner with Cleary Gottlieb Steen & Hamilton LLP.
“There is an institutional method by which claims against a corporate debtor can be extended or written down, and that’s binding on all creditors,” he says. For sovereign countries, negotiations are more “ad hoc.”
A&P has deals in place to sell 120 of its nearly 300 stores. It says it will continue its efforts to sell the rest.
The company has been on a slow decline since the 1950s, says Marc Levinson, author of “The Great A&P and the Struggle for Small Business America.”
“At its peak in the late 1920s, A&P became the first retailer anywhere to sell $1 billion worth of merchandise in a single year,” Levinson says. “It was truly a giant.”
If you’re a member of your local public radio station, we thank you — because your support helps those stations keep programs like Marketplace on the air. But for Marketplace to continue to grow, we need additional investment from those who care most about what we do: superfans like you.
Your donation — as little as $5 — helps us create more content that matters to you and your community, and to reach more people where they are – whether that’s radio, podcasts or online.
When you contribute directly to Marketplace, you become a partner in that mission: someone who understands that when we all get smarter, everybody wins.