Haggen files for bankruptcy

September 9, 2015

Haggen 2Grocery chain Haggen has filed for bankrupty following a troubled expansion into new locations, including the Central Coast.

The Washington-based supermarket chain filed Tuesday for Chapter 11 bankruptcy protection. Chapter 11 bankruptcy would allow the company to reorganize its business and assets, in addition to restructuring its debt.

Haggen filed for protection in a federal bankruptcy court in Delaware. The grocer listed more than a dozen creditors in the bankruptcy filing, and it claims to owe them about $14.8 million.

Haggen also said it has received commitments of up to $215 million in financing from existing lenders in order to keep its operations running.

In Dec. 2014, Haggen bought 146 Albertsons, Vons, Pavilions and Safeway stores. Before the purchase, it operated just 18 stores.

The Washington grocer purchased the 146 stores after federal regulators ordered Albertsons and Safeway to sell locations as part of a merger.

Shortly after Haggen took over the stores, prices increased and some of the previously stocked items were no longer available. Many of the stores’ customers left.

Last month, Haggen announced plans to close 27 stores. It previously laid off workers while cutting the salary and benefits of others. Dozens of Central Coast workers have lost their jobs since Haggen took over the grocery stores.

Earlier this month, Haggen sued Albertsons seeking more than $1 billion in damages. The suit followed a lawsuit Albertsons filed against Haggen in July.

Haggen accuses Albertsons of providing false, misleading and incomplete retail pricing data, causing Haggen to unknowingly inflate prices. The grocer also alleges Albertsons deliberately understocked certain items and overstocked perishable items.

Haggen claims Albertsons’s actions led to the bankruptcy filing.

In its lawsuit, Albertsons alleges Haggen failed to pay for more than $36 million for merchandise that was included in the sale.

Haggen CEO John Clougher said in a news release Tuesday that Chapter 11 bankruptcy is the best way for Haggen to preserve value for stakeholders.

“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,” Clougher said.


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Rambunctious

Haggen files for bankruptcy….


Isn’t this like me going out and refurnishing my home and charging a bunch of new clothes and electronic equipment and then filing for bankruptcy? Just sayin…


October

It’s more like you going out and buying 8 new homes (8 times what you own now) and then furnishing them and charging a bunch of stuff then filing bankruptcy.


slolusion

And only 8 days after you bought them, filing BK. If the stores empty and sit abandoned, that will be a definite bad sign for SLO county. However, if other grocers do come back and occupy these plaza’s in perhaps the mess can be cleaned up quickly. You have to remember that all the little mom and pop stores will go under once the anchor grocer sits empty. For a small town, with no jobs, that’s one nail in the coffin.


dogeatdog

Haggen’s started out small, grew a bit more, could not maintain and had to go smaller than they originally were. Then they decide to purchase 146 stores. I don’t have a crystal ball but the writing was on the wall.


The Hag also said they would be somewhere between Whole foods and Von’s prices, and now they bitch because Albertson’s gave them the wrong info on the pricing? Haggen’s claims that Albertson’s is responsible for their inflated pricing, hmm.



It sounds like they were ill prepared for the big increase and did not do their homework. they don’t know this area and the shopping trends we have towards the lost leaders in the weekly ads. They take no responsibility for any of the problem.


When you lay off your courtesy clerks and have assistant store managers out getting grocery carts, maybe your business plan is lacking some insight. When you have no clerks to help me out with my groceries and so you have to close your register to help me, I think you lack insight.


When I go to return something and there is no one at the customer service counter and you have to wait for them to show up, I think you lack insight.


You full service deli has more salads than lunch meat, something is wrong once again.


I could go on and on, the HAG should just go away quietly with a lesson learned.


Funny how Washington/Oregon folks don’t like it when Californians move to their state. well we sure did not like what you tried to pull in our state, and to our friends and neighbors who just want to earn a paycheck. Go away and give us a local small grocery store, who does not over inflate the price of food.


I feel for the employees they offered them the moon and sky above, but all they got was a kick in the pants and pink slips.


Stunned

Someone above me said this sounded like the plan all along and I couldn’t agree more. It’s either that or a multi-billion dollar company came to town with absolutely no business plan and everyone turned a deaf ear to it which is impossible.


Jorge Estrada

Maybe we’ll get an awsome Spencer’s Market on Johnson Ave.


kayaknut

Good Luck with that, Spencer’s in A.G. put on a big campaign of lies to prevent another grocery store at the corner of Grand and Courtland and after they were successful they closed the store. They are a very un-community friendly store and I was glad to see them leave A.G, Smart and Final is 100x times better than Spencers.


r0y

I’m guessing you seriously missed what happened with that…


aft50s

This is sounding more and more like a “grand design” that was contemplated months ahead of time.


It just seems like the scenario is moving much too quickly to be legit.


GrayGranny2010

Sounds like Haggen’s CEO and financial management staff didn’t do their homework. I’m thinking their jobs may go the same direction as those Albertson’s employees they “laid off” and lost their benefits.


SloNative46

(From the LA Times) “After struggling for months, grocer Haggen moved to stabilize itself by filing for bankruptcy protection and replacing the executive in charge of the chain’s ambitious expansion in California, Nevada and Arizona.


The Bellingham, Wash.-based grocer said Wednesday that Bill Shaner, chief executive in charge of the Pacific Southwest region, was no longer with the company.”


hijinks

“Stabilize itself” can be translated as we’ll mess over everybody we said we’d protect so we can profit from their “bad luck.” Bankruptcy is a legal ploy, not a statement of insolvency leading to death. It’s just part of the vulture capitalist game.


justbeware

It will be interesting to see how much time passes before Chapter 11 becomes Chapter 7.


hijinks

Not a chance. Chapter 11 is a well-thought-through ploy to change the board on which the game was to be played. It permits them to go back on EVERYTHING they promised when they signed the sales agreement.


Pelican1

Well Haggin, you are certainly reaping exactly what you have sewn.


micsca

Just a reminder for everyone. This whole fiasco was because the FTC forced Albertson to sell stores, because you apparently need protection from big grocer. Selling 147 stores to a much smaller retailer, who they would automatically become competitors to, is a recipe for disaster, and all approved by the FTC. This has played out in countless examples of FTC forced sales of businesses.


unlisted

Monopolies and oligopolies are so much better. Just look at the cable and cell service providers.


r0y

…or government. The worst monopoly of all.


SloNative46

Yep. Our nanny government said the forced sale of stores that resulted in the purchase by Haggen would maintain competition. So now Los Osos will have “one” grocery store. That went well, didn’t it?


(Disclosure: I have heard rumors of another grocer moving into the Von’s/Haggen location in Los Osos but it’s naught but hearsay at present)


bobfromsanluis

Fact: Yes, the FTC mandated that Albertson’s / Safeway / Von’s sell off some of their stores, since in many areas, Albertson’s and Safeway (or Von’s) where the only real competitors in a given area. What was NOT mandated by the FTC was that the sale of those stores had to happen to one company, and the FTC did not mandate that Haggen was the buyer. Albertson’s wanted this sale to go through to Haggen because it was easier than trying to sell off individual stores, and I still believe that there was some malfeasance on the part of Albertson’s also.


The FTC (Federal Trade Commission) has a purpose in it’s role of protecting the consumer from unfair competition as well as helping to keep monopolies from getting too big so that competition is eliminated in some areas. As for the Von’s/Haggen store in Los Osos, the failure of the store to remain profitable had nothing to do with the FTC, it was more an issue of Haggen biting off much more than it could handle, with apparently very little experience in running so many different stores in so many different, diverse areas, and using a “one size fits all” approach.


SloNative46

So . . . regarding specifically the Los Osos location, would the FTC have been OK with that remaining as it was — Von’s? Was the choice to sell that particular store to Haggen one forced by the FTC or was it merely Alberton’s desire to unload a lower performing outlet?


dogeatdog

Albertson’s decided what stores to sell, the lower performing are ALWAYS want a business wants to unload.


If all they did was unload bad stores no one would have bought them, so they threw a few good stores in to make the deal happen.


Business 101 as far as which ones they sold.


r0y

You nailed it! They did NOT have to divest the Los Osos location, but they did… what does that tell you?


justbeware

It doesn’t have a service deli and needed t$$ many TI’s?