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Monday, March 25 , 2019, 5:52 am | Fair 46º


Haggen Files for Bankruptcy to Retain Some Stores

In order to reorganize around its core profitable stores, Haggen this week filed for bankruptcy protection from creditors to maintain operations in the meantime.

Exactly where operations would be maintained wasn’t spelled out in Haggen’s voluntary Chapter 11 reorganization filing at the U.S. Bankruptcy Court for the District of Delaware in Wilmington.

The Bellingham, Wash.-based grocery chain grew its 18 regional store locations to 164 earlier this year when Haggen picked up 146 stores across five states from AB Acquisition LLC and Safeway Inc., the entity created when Safeway (owner of Vons) merged with Albertsons.

After months of struggling to find foothold in new markets, Haggen announced it would be closing or selling some 26 stores — many of them acquired in the deal with Albertsons.

The six former Albertsons and Vons stores converted in Santa Barbara County weren’t on the initial chopping block, but Haggen hasn’t ruled out more closures in the future.

A Haggen spokesperson couldn’t confirm Wednesday whether any of the local stores would be retained.

“Discussions are underway with interested parties to sell many of the company’s remaining assets,” the company said in its bankruptcy announcement.

Haggen said it 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. 

Haggen is also working to continue paying vendors, employee wages, certain benefits and customer programs during the restructuring.

“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,” CEO John Clougher said.

“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 hired Sagent Advisors to help sell some locations in five states and to explore market interest for various store locations.

The company has blamed its failure to find success in new markets on Albertsons in a $1 billion lawsuit, which alleges the fellow grocer sabotaged its entrance into areas by providing false retail data for pricing, taking store inventory and more.

Since expanding, Haggen has cut employee hours and laid off workers at some of its stores.

The company is also facing several lawsuits, including wrongful termination of a former employee at the Carpinteria Haggen, workers rights’ violations and a class-action complaint for letting go 14 developmentally disabled employees.

Noozhawk staff writer Gina Potthoff can be reached at .(JavaScript must be enabled to view this email address). Follow Noozhawk on Twitter: @noozhawk, @NoozhawkNews and @NoozhawkBiz. Connect with Noozhawk on Facebook.

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