A&P, the troubled US retailer, is reportedly set to file for bankuptcy to restructure its debt.

According to the Bloomberg news agency, A&P could file to reorganise the business under court protection this weekend.

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Bloomberg cited two sources as claiming that A&P had hired lawyers to represent the retailer in negotiations with creditors and in any moves to apply for Chapter 11.

Officials at A&P could not be reached for immediate comment.

The speculation is the latest twist in the recent history of A&P, which in the 1950s was the dominant retailer in the US.

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Founded in The Great American Tea Company in 1859, the company was renamed to The Great Atlantic and Pacific Tea Company – its current name – in 1870. By 1925, the retailer had almost 14,000 stores and by 1930 had around 16,000 outlets.

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However, A&P has gradually lost market share since the 1960s and, in recent years, has faced tough competition from the likes of Target Corp. and Wal-Mart Stores.

In 2007, A&P bought regional US retailer Pathmark for US$1.4bn, a deal management said would “transform” the business. However, in the last two years A&P has made deepening losses.

This year, A&P appointed its second CEO in six months after former OfficeMax executive Sam Martin was brought in to replace ex-Borders boss Ron Marshall – who only took the helm in January.

Under Martin, A&P has agreed to sell stores and made a series of changes to its executive team in a bid to revitalise the business.

At 12:24 ET this afternoon, A&P’s shares had slumped almost 65% to $1 each.