Haggen grocery store chain files for bankruptcy

BELLINGHAM — Haggen has filed for Chapter 11 bankruptcy protection.

In a news release sent out late Tuesday night, the Bellingham-based grocer said the bankruptcy filing was needed to help the company reorganize around its core, profitable stores. It will also give the company up to $215 million in debtor-in-possession financing options from its existing lenders in order to maintain day-to-day operations.

“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, in the news release. “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.”

The struggling grocer has hired Sagent Advisors to sell some of the 137 remaining stores in the five states in which it does business. Discussions are already underway to sell many of the company’s remaining assets, according to the news release.

The grocer went from a family business to a West Coast power virtually overnight after buying 146 stores from Albertsons in December, growing to a company with 164 stores. The company has struggled in converting many of those stores to the Haggen brand.

The move comes about a week after Haggen announced it was suing Albertsons Cos. for $1 billion. In its Sept. 1 lawsuit, Haggen alleged 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.”

Haggen is also facing an Albertsons lawsuit filed in July for fraud, saying the grocer failed to pay for $41.1 million in inventory.

Haggen’s huge acquisition — court documents indicate the 146-store sale was more than $300 million — has had a bumpy transition, particularly in the Southern California and Arizona markets. Last month Haggen announced the closure or sale of 27 stores, 26 of which were part of the acquisition from Albertsons and Safeway. The sale was originally part of the divestment process brought about by the Federal Trade Commission reviewing the Albertsons-Safeway merger. That merger was completed in January.

The bankruptcy filing for Haggen Holdings LLC is in the U.S. Bankruptcy Court in Wilmington, Del.