A New Jersey federal judge has given preliminary approval to a $9 million class action settlement resolving securities claims that senior executives at The Great Atlantic & Pacific Tea Co. Inc. (A&P) failed to disclose the grocery chain’s financial problems shortly before it went into bankruptcy. U.S. District Judge William Martini granted preliminary approval to the settlement that was submitted to the court in May. The Judge vacated an order from April dismissing the lawsuit against A&P. A final hearing over whether to grant final approval of the settlement has been scheduled for December.
Shareholders filed the lawsuit in 2011 alleging that A&P officers disseminated false and misleading statements that deceived investors about the condition of A&P’s business, artificially inflated the company’s stock price and enabled A&P to sell more than $430 million in debt on more favorable terms. A&P, based in Montvale, N.J., and 53 affiliates filed for Chapter 11 bankruptcy protection in December 2010, burdened by an increasingly competitive marketplace and a heavy debt load that shaved away profits as the recession cut into sales.
The complaint, filed on behalf of all those who purchased A&P stock between July 2009 and December 2010, names current and former A&P executives Christian W.E. Haub, Eric Claus, Ron Marshall, Samuel Martin and Brenda Galgano as co-defendants. A&P, which emerged from bankruptcy in 2012, itself is not named as a defendant.
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