A&P’s Late-Pay Feud With Supplier Heads To Court

The topic of late payments is often focused on the U.K. Lawmakers there are facing growing frustration among its small suppliers that say they have to wait too long, sometimes months, to get paid from their large corporate buyers.

But late payments by big companies are an issue that occur the world over. One such dispute has now spilled over into the courts in the U.S., demonstrating just how dire the situation can be.

According to reports on Wednesday (June 24), grocery bag and container supplier Imperial Bag & Paper Co. filed a lawsuit against grocery chain A&P claiming the retailer owes Imperial Bag $3.7 million. The case, which also argues that A&P has failed to respond to all requests for payment initiated by Imperial Bag, was filed in the New York Supreme Court.

According to Imperial Bag CFO Paul Cervino, the grocery chain has stopped placing orders with the company last week after Imperial Bag’s demand for payment. “We figured out their financial position and tightened down on credit,” the executive said. “We were not willing to keep shipping without payment.”

Imperial Bag is among several suppliers in the nation that have begun to get tough with A&P and its subsidiaries, including Pathmark, Food Emporium and SuperFresh, for allegedly failing to settle invoices. But while the lawsuit signals that suppliers are no longer going to tolerate late payments, Imperial Bag’s plight also reveals just how difficult it can be for small suppliers to take on the big guys.

According to reports, a lack of new business from A&P, in addition to the missing $3.7 million, has forced the family-owned company to cut about 10 members of its staff.

Unnamed sources have said that the chain is reportedly considering a company breakup or bankruptcy and have noted strained relationships between the chain and more of its suppliers. In a statement, however, A&P said it maintains “good relationships with our suppliers.”

In response to the allegations, A&P publicly denounced the lawsuit and vowed to countersue its supplier for breach of contract. In a statement, the company claimed that Imperial Bag has “attempted to unilaterally change the terms of its contract” and then breached that contract when it changed credit terms, reports said.

A&P was once the nation’s largest food retailer but has since shrunk down to operating about 300 stores across six states, according to reports.

The supermarket industry — especially in the UK. — has a long history of allegedly treating its suppliers unfairly.