Blatstein seeks Plan B for N. Liberties Pathmark

"The Northern Liberties developer behind a planned Pathmark supermarket has asked a bankruptcy judge to clear the way for a different supermarket to open, if need be, at the old Schmidt's Brewery, where Pathmark holds a lease but has not yet opened its store.

"I petitioned the courts to have them do that a month ago," Bart Blatstein said Wednesday of efforts to enforce or dissolve his lease with Pathmark, whose parent company, A&P, has been in bankruptcy since December.

"Leave," Blatstein said. "I've got a bunch of operators that want to go there."

In a motion filed in March in U.S. Bankruptcy Court in the Southern District of New York, Schmidts Retail L.P. asked for a ruling to compel A&P to assume or reject its lease on the Northern Liberties site near Blatstein's Piazza development.

Delays since A&P filed for bankruptcy are having ripple effects across the newly constructed project - an L-shaped center that would contain a second-story supermarket, with national chain retailers at street level. Delays also threaten the developer's financing obligations, according to court filings.

Pathmark's delays are affecting the ability to sign leases with other tenants, according to the motion.

"Schmidts' ability to rent other retail space in the Redevelopment Project has now virtually disappeared because prospective tenants and real estate brokers are concerned about whether Pathmark will occupy the premises," the motion said.

"This delay puts Schmidts in danger of breaching its financing obligations as to, and its leases with other tenants in, the Redeveloment Project," the developer said, and is hurting efforts to potentially sign a different supermarket operator, too.

Blatstein's motion came amid upheaval from the bankruptcy filing by Great Atlantic & Pacific Tea Co. Inc., which has stalled Pathmark's plans to open in the 52,000-square-foot-space he built in the heart of resurgent Northern Liberties.

A&P spokesman Eric Andrus declined to comment Wednesday on the company's intentions regarding the Northern Liberties site.

But a Schmidts executive, Adam Lisausky, said in an affidavit filed with the court that Pathmark officials told him they want to abandon ties to the project.

" ... the Debtors and their financial advisors have engaged in discussions with me and other executives at Schmidts regarding the Debtors' sale of the furniture, fixtures, and equipment already installed in the Premises to Schmidts," Lisausky said in the affadavit. "These discussions have also involved the timing of the Debtors' anticipated rejection of the Lease."

Blatstein's group and Pathmark entered into their lease agreement in September 2008 for what would represent the redeveloped neighborhood's only full-scale supermarket. Schmidts constructed the new Pathmark as part of a larger retail development and turned over the property to the grocer on Feb. 7, the filing said.

The Pathmark sign is up, but the store is not yet open for business. And over the last few months, its parent company has announced a slew of closures - not grand openings - across its mid-Atlantic holdings, including some area Pathmark and Superfresh stores, as it attempts to clean up its balance sheet.

Matt Ruben, president of the Northern Liberties Neighbors Association, said that residents were eager for the supermarket to open, but that word in recent weeks was that Blatstein was working on a Plan B to replace Pathmark, if necessary.

Ruben said he was confident Blatstein would fill the space sooner than later.

"If it's not a Pathmark, it will be something else," Ruben said. "My impression is that they intend to do everything in their power to open a supermarket at some time in that location.

Blatstein, the man most often credited with transforming Northern Liberties from a discarded industrial patch to a haven of homeownership for a generation of younger, aspirational Philadelphians, would say little about what other supermarket chains he was courting for the site.

But given that there has been considerable population and income growth in Northern Liberties in recent years - and no big supermarket yet in the immediate vicinity - he expressed confidence that another chain would be eager to slip into the space that has been built.

"It's beautiful," Blatstein said, "and it's ready to go."

Another grocery chain would be in place and ready to open "this summer," he said, while declining to elaborate on whether negotiations were under way.

A hearing on the Schmidts motion is set for April 28. A&P has until April 21 to file a response to Blatstein's request."