A&P owner hires restructuring lawyers - sources

NEW YORK Fri Dec 10, 2010 12:14pm EST

NEW YORK Dec 10 (Reuters) - Great Atlantic & Pacific Tea Co Inc GAP.N, operator of A&P and other supermarkets, has hired restructuring lawyers after facing a cash crunch in recent weeks, according to people with knowledge of the matter.

The company, once America's biggest grocer, has hired law firm Kirkland & Ellis for legal advice, said the sources, who asked not to be named because they were not authorized to speak to the media.

A&P spokeswoman Lauren La Bruno did not return calls, and Kirkland & Ellis declined to comment.

Kirkland & Ellis is one of the top U.S. restructuring and bankruptcy law firms.

Great Atlantic & Pacific Tea, whose majority stockholders are activist investor Ron Burkle and the German retail group Tengelmann, has been posting losses for most of the past decade.

People familiar with the company's vendors said some vendors are now requiring cash on delivery, increasing the grocer's rate of cash burn. An attorney for one of the company's major vendors declined to comment. (Reporting by Emily Chasan and Caroline Humer; additional reporting by Thomas Hals in Delaware and Mihir Dalal in Bangalore; editing by Ted Kerr and John Wallace)