Haggen grocery stores file for bankruptcy
– Haggen, the West Coast regional grocer with stores in Paso Robles and Atascadero, announced on Tuesday it has filed petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code. The company has received commitments for up to $215 million in debtor-in-possession financing from its existing lenders to maintain operations and the flow of merchandise to its stores during the sale process.
The action follows a difficult transition that started in December 2014 when Haggen bought and converted 146 Albertsons and Safeway stores, including six stores in San Luis Obispo County. Haggen has laid off employees, closed stores and become embroiled in lawsuits.
In July, Albertsons filed a lawsuit against Haggen, accusing the grocer of fraud in failing to pay more than $36 million as part of the sale of 146 grocery stores. According to that lawsuit, Albertsons says that Haggen refused to pay for $36 million of inventory at 32 stores it acquired.
Haggen followed with its own lawsuit against Albertsons seeking more than $1 billion in damages related to the business deal. The suit says Albertsons engaged in coordinated and systematic efforts to eliminate competition and Haggen as a viable competitor in over 130 local grocery markets in five states.
During the bankruptcy, Haggen says it plans to continue day-to-day operations for customers, employees, vendors and suppliers, and other business partners during the restructuring. As part of that, it is seeking court approval to continue employee wages and certain benefits and honor certain customer programs.
“After careful consideration of all alternatives, the company concluded that a reorganization through the Chapter 11 process is the best way for Haggen to preserve value for all stakeholders,” said John Clougher, CEO of Haggen. “The action we are taking today will allow us to continue to serve our customers and communities while providing Haggen with a process to re-align our operations to be positioned for the future.”
Haggen has engaged Sagent Advisors to market for sale some locations in the five states it operates and to explore market interest for various store locations. Discussions are underway with interested parties to sell many of the company’s remaining assets.
Haggen grew from an 18 store regional grocer to 164 stores through the purchase of Albertson’s locations in December 2014.