A&P gets litigation funding to continue proceedings against McKesson

By Sarah Lizee

Olympia, Wash., Aug. 15 – The Great Atlantic & Pacific Tea Co., Inc. (A&P) received court approval to obtain litigation funding so that the official committee of unsecured creditors can continue adversary proceedings against McKesson Corp., according to court documents filed with the U.S. Bankruptcy Court for the Southern District of New York.

The company said that so far it has paid about 20% of the administrative expense claims in its case. It has also resolved all other outstanding administrative claims and issues necessary to wind down its estate, except for the McKesson adversary proceedings and the administrative claims filed by McKesson, which are challenged in those proceedings.

The company said that abandoning the adversary proceedings would be detrimental to both the debtor’s estate and holders of administrative expenses.

The official committee of unsecured creditors continues to pursue the adversary proceedings but given the limited resources remaining in the debtor’s estate, A&P sought the litigation financing. The amount of the litigation funding was redacted from court documents.

The company said the agreement provides the debtor and the creditors’ committee with enough funds to pursue the McKesson adversary proceedings through trial, preserving the potential for an additional recovery to the debtor’s estate.

Additionally, the funding agreement permits the continued retention of outside counsel, enabling the continued pursuit of the McKesson adversary proceedings without any delays, interruptions, or loss of knowledge in the proceedings.

Most importantly, the funding agreement does not require the debtor to repay any amounts advanced unless the debtor actually realizes litigation proceeds, the company said.

A&P, a Montvale, N.J.-based operator of supermarkets, filed for bankruptcy on July 19, 2015. The Chapter 11 case number is 15-23007.

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