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Haggen files for bankruptcy, owes millions to creditors

Company blames Albertsons for sabotaging efforts, court documents claim.

SUBMITTED PHOTO - Haggen supermarket filed for bankruptcy protection this week, claiming for Albertsons sabotaged the company after it solder Haggen 146 stores across five states. Supermarket grocer Haggen filed for Chapter 11 bankruptcy this week, two weeks after announcing that it would be shutting down more than 20 stores, including its long-running Tualatin location.

Haggen filed for bankruptcy protection on Tuesday in U.S. Bankruptcy Court in Delaware, adding another twist to the winding road the grocery chain has found itself on since opening stores across the West earlier this year.

“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,” John Clougher, Haggen’s CEO said in a statement to media late Tuesday night. “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 operates stores across five states, the vast majority of which it purchased from Albertsons and Safeway when the two grocery giants merged in 2014.

Haggen exploded in size, growing from 18 stores to 164, opening stores in Tigard, Beaverton and Sherwood and becoming one of the West Coast’s largest grocery chains practically overnight. But the company struggled to gain a foothold in new markets, particularly California and Arizona, which were unused to the brand.

In August, the company announced that it would close 27 stores across five states, including its store in Tualatin, which the company has run for years. The supermarket chain had already cut hours and laid off staff at several stores. In its bankruptcy announcement on Tuesday, the company said that it was working to sell many of the company’s remaining assets as well.

Millions owed

SUBMITTED PHOTO - Construction crews transform a former Albertsons store into a Haggen earlier this year. Haggen officials claim Albertsons tried to cut out the new competition by giving Haggen false information about pricing, which caused customers to shop elsewhere.The 22-page federal court filing lists millions in debt owed to dozens of creditors, from multinational companies like Coca-Cola and Frito Lay to former employees, The Times' news partner KOIN 6 News reported.

The supermarket chain’s largest creditor, Unified Grocer, is owed an estimated $14.8 million, according to court documents.

The company’s former president CEO, Dale Henley, is owed nearly $5 million in deferred compensation. Henely retired from Haggen in 2010 after 26 years with the company.

Albertsons is also listed as a creditor, and is owed an “undetermined” amount of money.

Albertsons sued Haggen for $41 million in July, claiming the grocer hadn't paid for several of the stores it purchased from the company.

Haggen, in turn, filed a $1 billion counter-suit on Sept. 1, alleging that Albertsons sabotaged Haggen's efforts by lying about the pricing of its merchandise, and provided less stock than needed.

It’s unclear whether the bankruptcy will impact employees. In its prepared statement, the company said that it had asked the court to continue employee wages and certain benefits, but did not elaborate.

Deborah Pleva, a Haggen spokeswoman, claimed that the chain would receive up to $215 million in financing commitments from its existing lenders, in order to maintain operations at its current stores.

The company didn't mince words when it came to why it had filed for bankruptcy, placing the blame squarely on the shoulders of Albertsons.

“The associated conversion process of the stores made Albertsons cooperation and good faith implementation of the terms of the deal … essential,” the company wrote. “This did not occur … which ultimately led to Haggen’s failure in its efforts to convert newly acquired stores and ultimately resulting in the Chapter 11 filing.”

By Geoff Pursinger
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