Haggen files for Chapter 11 bankruptcy, co-CEO leaves and legal action is taken against Albertsons
Haggen, the West Coast regional grocer, has filed for bankruptcy.
"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, chief executive officer 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."
The company has received commitments for up to $215 million in debtor-in-possession (DIP) financing from its existing lenders to maintain operations and the flow of merchandise to its stores during the sale process, according to a news release.
The decision comes shortly after a hurricane of unfortunate events for the company.
Following the acquisition of 146 Albertsons locations in December, 2014, the Washington-based Haggen rushed into the Southwest last June with high hopes of establishing a foothold in the highly competitive grocery market.
The company soon found that the transition would not go over as smoothly as it thought. Consumer curiosity for the new grocery chain was quickly replaced by a trending distaste.
David Sardeson witnessed this dramatic shift in enthusiasm firsthand at the Prescott Valley Haggen location, where he has worked for 23 years, first under the Albertsons
banner and then as a Haggen employee.
He said it was clear that a specialty high-end grocer such as Haggen would not be able to easily fill the gap in the market left by Albertsons, which often markets itself as an affordable run-of-the-mill grocer.
"They bit off more than they can chew," Sardeson said. "They should have done their homework."
Haggen's appeal only worsened as it chose to lay off many of its employees across the board in late July. The company then announced in mid-August that it would be closing 26
stores, including the one in Prescott Valley and may be closing more.
In the midst of this decline, legal action between Haggen and Albertsons began.
First, Albertsons filed a lawsuit against Haggen in mid-July, accusing the grocer of fraud in failing to pay close to $41 million in final installments for the initial purchasing deal between the two companies, according to news journals across the West.
Then, just last week, Haggen sued Albertsons for more than $1 billion in damages, alleging the supermarket giant engaged in systematic efforts to eliminate it as a viable competitor in five states, according to a news release.
The lawsuit says Albertsons gave Haggen misleading and incomplete retail-pricing data, causing it to unknowingly inflate prices, as well as illegally accessing Haggen's
confidential data to get the upper hand.
"Had Haggen known Albertsons' true intentions, Haggen would never have purchased the stores, nor would the FTC have permitted such a purchase," according to Haggen's lawsuit.
These legal actions have yet to be decided in court.
Haggen's grocery staff aren't the only ones losing their jobs as a result of the turmoil.
Haggen announced that its co-CEO Bill Shaner is no longer with the company as of today.
Co-CEO John Clougher will now be leading the company going forward, according to the statement.
The Prescott Valley Haggen is slated to shutter Oct. 13, but store manager Jonathon Bryan said he has not received confirmation on this and
that it may close as early as Sept. 30, which is the last day scheduled with the liquidation company that is moving out the inventory.
Follow Max Efrein on Twitter @mefrein. Reach him at 928-445-3333 ext. 1105, or 928-642-7864.