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Haggen to sell 36 stores in California, Nevada

Haggen, which filed for Chapter 11 bankruptcy reorganization last month, is selling 35 stores in Nevada and Southern California.
Haggen, which filed for Chapter 11 bankruptcy reorganization last month, is selling 35 stores in Nevada and Southern California. The Bellingham Herald

Haggen has found two buyers for 36 of its stores in the California and Nevada markets.

The Bellingham-based grocer, which filed for Chapter 11 bankruptcy reorganization last month, is selling one Nevada and 27 Southern California stores to Smart & Final LLC and eight Southern California stores to Gelson’s Markets, according to a company news release.

The sale is part of the company’s overall plan to shrink from its original 164 stores to 37 and exit the southwest markets it had entered earlier this year.

Haggen also filed a motion in court to establish a bid process for the rest of the stores it announced it was closing on Sept. 24. Those interested in purchasing any of the other stores slated for closure need to submit an indication of interest by Monday, Oct. 26 and a submission of bids by Monday, Nov. 2. Pending court approval, the auction would then be held on Monday, Nov. 9. This auction format is usually referred to as a stalking horse offer, which is an attempt to test the market in advance of an auction.

Gelson’s has 18 stores in the Southern California market and markets itself as a premier supermarket chain, according to its website. Smart & Final describes itself as a supermarket chain that offers warehouse savings and big discounts on bulk items. The company has around 250 stores in the Western U.S. and northern Mexico, according to its website.

The upcoming auction is the next step in what has been a tumultuous year for the Bellingham-based grocer.

After spending more than $300 million to acquire 146 stores from Albertsons and Safeway in December, the company struggled to convert many of those stores to the Haggen brand. The company also was hit with a $41.1 million lawsuit by Albertsons for failing to pay for inventory. In August, the Haggen company announced it would close 27 stores, followed by its own lawsuit against Albertsons for up to $1 billion in damages, alleging Albertsons sabotaged the deal. On Sept. 24 Haggen announced it was closing 100 stores.

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

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