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.

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.

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.

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.