(Adds information about company ownership, details throughout)
July 20 (Reuters) - Storied supermarket chain Great Atlantic & Pacific Tea Co Inc, better known as A&P, has filed for bankruptcy protection for the second time in five years and put hundreds of its stores up for sale, bringing to an end the 156-year-old company.
A&P, which also owns Best Cellars, Pathmark and Superfresh stores, has been squeezed by discounters such as Wal-Mart Stores Inc and up-market grocery chains such as Whole Foods Market Inc. The company operates in six Northeastern U.S. states.
A&P agreed to sell about 120 of its 296 stores for about $600 million to Acme Markets Inc, owner of Safeway and Albertsons grocery stores, Stop & Shop Supermarket Co LLC and Key Food Stores Co-operative Inc.
However, the proposed buyers were not willing to take on A&P's collective bargaining agreements or pension obligations, according to court documents. About 93 percent of A&P's 28,500 workers are unionized, the documents show.
The company will try to find buyers for about 150 other stores it hoped to sell as an ongoing business, according to the documents.
The company emerged from bankruptcy in 2012 with a big advertising push and lower prices but never met its financial targets, according to a court filing by Christopher McGarry, the company's chief restructuring officer.
A&P's high debt load and thin margins have prevented much-needed investment in upgrading its often-outdated stores.
A&P has proposed an auction in September for its stores, according to documents filed with the U.S. Bankruptcy Court in White Plains, New York.
The company said it will close 25 stores due to lack of interest and significant operating losses.
A&P had assets of $1.6 billion and debts of $2.3 billion as of the end of February, according to court documents.
EARLIER BANKRUPTCY FILING
In its heyday in the early 20th century, A&P operated more than 15,000 stores. It first filed for bankruptcy in 2010, re-emerging two years later as a private company after obtaining financing from investors including Goldman Sachs and an affiliate of billionaire Ron Burkle.
About 77 percent of the stock in A&P's parent company is owned by affiliates of Mount Kellett Capital Management, with affiliates of Burkle's Yucaipa Companies owning the rest.
Mount Kellett, founded by Goldman Sachs alum Mark McGoldrick, has been struggling and earlier this year Fortress Investment Group invested $200 million in the fund and became a co-manager, according to the Wall Street Journal.
An affiliate of Fortress agreed to provide $100 million in debtor-in-possession financing to A&P to carry it through its Chapter 11 bankruptcy, documents show.
Consumer Reports magazine in May ranked 68 U.S. supermarket chains based on reader surveys of food quality, staff courtesy and store cleanliness. While Wegmans of Gates, New York ranked No. 1, Pathmark ranked 65, A&P 66 and Waldbaum's 68.
For fiscal year 2014, A&P had a net loss of $305 million.
A&P has hired investment bank Evercore Partners to sell its stores.
The company was founded as a mail-order business in 1859 by tea and spice merchants George Huntington Hartford and George Gilman. In the same year, it opened its first store-warehouse operation in New York City, according to A&P's website.
The case is in U.S. Bankruptcy Court, Southern District of New York, Case No: 15-23007.
(Reporting by Tom Hals in WILMINGTON, Delaware, Supriya Kurane and Yashaswini Swamynathan in BENGALURU; Editing by Joyjeet Das and Bernadette Baum)