State AG: Haggen plans to pay laid-off workers on time

Bellingham-based grocer Haggen, which has filed for chapter 11 bankruptcy, has assured the state attorney general that the company’s laid-off workers will be paid on time.
Bellingham-based grocer Haggen, which has filed for chapter 11 bankruptcy, has assured the state attorney general that the company’s laid-off workers will be paid on time. The Bellingham Herald

Washington state has reached an agreement with Bellingham-based grocer Haggen to make sure the company’s laid-off workers are paid on time.

State Attorney General Bob Ferguson said in a news release that his office has received assurances from Haggen’s lawyers that the company fully intends to follow state law and pay laid-off workers at the end of the pay period. Haggen is currently going through the Chapter 11 bankruptcy reorganization process.

Speculation about when Haggen would pay laid-off employees came up last week when the grocer filed a motion in court seeking relief from “fast pay” laws in the states in which Haggen planned to close stores. While Washington state has a fast-pay law, a federal bankruptcy court has the discretion to waive certain state requirements, said Peter Lavallee, communications director at the state attorney general’s office.

Lavallee said the conversation with Haggen’s lawyers was a civil one, and they were willing to drop the waiver request when asked.

Haggen officials did not immediately respond to questions about details of the agreement.

In last week’s court filing, Haggen cited the sweeping nature of the store-closing sales format as a reason why it sought the waiver. The move came as Haggen announced it was closing 100 stores and leaving the Pacific Southwest market, shrinking in size to 37 stores. The closure list included 14 stores in Washington state, none of them in Whatcom or Skagit counties.

Haggen also announced last week through a Worker Adjustment and Retraining Notification that it was cutting 1,073 jobs starting on Tuesday, Nov. 24.

How Haggen handles its employees could be key as it continues to work its way through the reorganization process. Last week, the union representing Haggen’s workers was allowed a seat on the seven-member unsecured creditors committee, which will represent those owed money by Haggen but who are not backed by collateral assets. Haggen workers are represented by the United Food and Commercial Workers International.

In a written statement to members on Saturday, Sept. 26, union officials said they do not believe Haggen has taken “any good-faith steps to pursue buyers” of the stores the company plans to close. The union said it will do what it can to ensure some of the stores are sold to another buyer.

“In response to Haggen’s motion, we will work with any other parties in the bankruptcy process who also want to see these stores sold as successful operations,” officials said in the letter.

Court documents detail why Haggen wants to close these 100 stores as soon as possible. The stores on the closure list are costing the company $400,000 a day. The documents indicate that closing the stores would mean a savings of $57.4 million for the remainder of the year. Closing the stores also would mean about $125.6 million in gross proceeds, which would provide Haggen “with a necessary and significant cash infusion,” according to the court documents.

Reach Dave Gallagher at 360-715-2269 or dave.gallagher@bellinghamherald.com. Follow him on Twitter at @BhamHeraldBiz and on Facebook at BellinghamHeraldBusiness.