UFCW STATEMENT ON A&P BANKRUPTCY DEVELOPMENTS

Q&A for UFCW Members – The 1113(e) Filing  

 A&P has filed a motion under Section 1113 (e) of the bankruptcy law. We understand the real concerns this terrible news will have on you and all of our members.

We want to be very honest about what this means, and to address your questions about that legal process as well as the status of severance pay.

As always, if you have any questions, please reach out to your union representative. We are here to help you and your family as best we can during this difficult process.

Q.  What Can Happen To Our Contracts In Chapter 11 Bankruptcy under Section 1113?

A.  The bankruptcy court can allow a company (like A&P) that has filed for bankruptcy to “reject” a collective bargaining agreement (CBA). A&P has stated in legal filings that it expects to file a rejection motion before the end of the month and will request that it be head before October 7. The process to do so involves a numbers of legal steps – all of which offer us the chance to make the best arguments available in negotiations and in court. We want you to know that we will fight hard to change this but you should know that bankruptcy law and the courts favor companies.

Unfortunately, if the court rules in favor of the company, our contracts are no longer in effect.

The legal process is typically referred to as an “1113” because Section 1113 of the Bankruptcy Code sets up the process and is the standard for the judge to use when deciding whether to allow the company to reject a CBA. During these legal proceedings, there are a lot of court procedures and negotiations the company has to go through first.

 

Before a CBA can be broken, A&P must make a proposal to the union and bargain in good faith. If no agreement is reached, the dispute goes before the court. The judge will eventually decide whether or not the contract is rejected and that process moves very quickly. If the company is successful at that point, they can implement their final proposal and the union is generally allowed to strike.

 

We want you to know that we will keep you aware of where this process stands, and the actions we will take to defend all of our members and our contracts.

 

Q.  What Can Happen To Our Contracts In Chapter 11 Bankruptcy under Section 1113(e)?

A. In an “1113(e)” motion the company asks the court for an emergency order that modifies a CBA and makes the process just described above move even faster. The biggest difference is that the company is allowed to skip the negotiating process with the union and go straight to court to seek a ruling to modify the CBAs.  A&P has filed a Section 1113(e) motion and asked that it be heard on August 17.  The requests within the motion include:

·      Termination of bumping provisions.

·      Severance to workers in stores that are closing that will be paid up front, but will not exceed 25% of what is due according to your contract.

·      Health insurance that will continue throughout 100% of the required severance period as stated in your contract.

If the motion is granted, the order by the judge cannot be appealed except in unusual circumstances which we don't expect to happen here.

While bankruptcy law and the courts favor companies like A&P, we are going to fight hard in negotiations and in court to protect our members and our contracts.

 

Q. How quickly can a Section 1113(e) hearing be heard?  How quickly could the bankruptcy court order our contracts to be changed?

 

A. As stated above, A&P has asked that the 1113(e) motion be heard on August 17. If the court grants the motion, changes to the contract could be effective immediately following the hearing.

We want you to know that we are discussing with our attorneys and contemplating the best legal actions and strategies to your jobs and contractual benefits which we all worked so hard to attain.

Q. How is severance treated in bankruptcy? When will I be paid severance if I am laid off and not hired by a purchaser of A&P stores?

A.  The terrible reality is that based on bankruptcy laws, many other debt claims take priority over severance, and will likely be paid before severance. As reviewed above, the company’s 1113(e) motion requests that severance to workers in stores that are closing be paid up front, but not exceed 25% of what is due according to your contract.

We will continue to fight to make it very clear to A&P and the bankruptcy judge that A&P should honor its contractual responsibilities to you and your families. 

HEALTH CARE REFORM INFORMATION