Bellingham-based grocer Haggen is putting plans in place to potentially sell its core stores, including all five in Whatcom County.
In a court document filed late Monday, Nov. 9, the company scheduled a hearing at the U.S. Bankruptcy Court in Delaware for 11 a.m. PST on Friday, Dec. 4 to discuss the sale of its 32 core stores, including four in Bellingham, a pharmacy on Cordata Parkway and a store in Ferndale. A timeline was submitted, with the auction of the core stores scheduled for Jan. 8.
“The debtors (Haggen) have decided, in their business judgment, to sell all or substantially all of the assets — which collectively represent the debtors’ most valuable store locations — in order to further maximize recoveries to the debtors estates, their creditors and all parties in interest,” according to the court document.
In an email, Haggen officials said they are required to explore potential outside opportunities for all of its stores.
“Despite the filing, Haggen does not anticipate any changes to continuing operations at the core stores including regular payments to suppliers and partners,” the statement said. Haggen officials did not elaborate beyond the email.
This latest step creates an array of options for what happens next to the Whatcom County stores. The filing could be a Plan B if the auction of the non-core stores doesn’t bring in enough money to pay off creditors. It could also mean the core stores could get sold to either another grocery chain or investment firm, which would either keep the Haggen name or change it to something else.
In the court documents, Haggen has proposed an auction format for its core stores similar to the auction that is taking place this week for the non-core stores, which includes a stalking horse bid. A stalking horse bid is an attempt by Haggen to test the market prior to the auction. If Haggen does find a stalking horse purchaser for any of its stores, it could still sell them to a qualified bidder at a higher price. The proposed deadline to designate any stalking horse purchasers is Monday, Dec. 21.
Grocery industry experts remain critical of what’s happened.
David Livingston, owner of DJL, a supermarket location research company in Milwaukee, said it’s becoming apparent that the Haggen deal was more of a real estate play rather than attempted expansion. The big losers in this case are Haggen employees and the customers, he said.
“It looks like this was a big charade to hide behind the bankruptcy,” Livingstone said.
The auction of the non-core stores continues, with the California, Nevada and Arizona locations going through the process on Nov. 9-10. The 18 non-core Washington stores are scheduled to be auctioned on Wednesday, Nov. 11.
The United Food and Commercial Workers International Union also weighed in on the auction, urging Haggen in a written statement to sell the stores to responsible store owners who understand the value of the workers. The UFCW represents the Haggen workers.
“While the hard-working men and women of Haggen’s have all been experiencing untold frustration and concern during these past few months, we will stand together and support one another through these difficult times,” the union said in a written statement.
Haggen’s 32 core stores going to auction Jan. 8:
▪ Whatcom, 6: Bellingham (Barkley, Meridian, Sehome, Fairhaven, Cordata pharmacy) and Ferndale;
▪ Skagit, 2: Mount Vernon, Burlington;
▪ Other Washington, 17: Snohomish, 2; Olympia, 2; and Woodinville, Auburn, Stanwood, Lake Stevens, Marysville, Puyallup, Lakewood, Seattle, Oak Harbor, Redmond, Walla Walla; Wenatchee, Port Angeles.
▪ Oregon, 7: Bend, 2; Oregon City , Eugene, Grants Pass, Tigard, Lake Oswego.
A list of recent events that have taken place with Haggen:
December 2014: Haggen acquires 146 stores as a part of the divestment process brought about by the Federal Trade Commission's review of the Albertsons-Safeway merger. With the acquisition, Haggen expands from 18 stores and 16 pharmacies to 164 stores and 106 pharmacies across Washington, Oregon, California, Nevada and Arizona.
Early 2015: Haggen sets an ambitious goal of converting stores under its banner within a 15-week period.
July 2015: The company acknowledges layoffs and the reduction of hours for an undisclosed number of employees, mostly in the south region.
July 2015: Albertsons files a $41.1 million lawsuit accusing Haggen of fraud.
August 2015: Haggen announces the closure or sale of 27 stores, 26 of which were from the Albertsons-Safeway acquisition.
Sept. 1, 2015: Haggen sues Albertsons for more than $1 billion in damages.
Sept. 9, 2015: Haggen files for Chapter 11 bankruptcy protection.
Sept. 25, 2015: Haggen announces list of 37 core stores and plans to auction the rest.
Oct. 6, 2015: Announces sale of 36 stores in California and Nevada to Smart & Final and Gelson’s Markets.
Nov. 9, 2015: Auction of its remaining non-core stores begins.
Nov. 9, 2015: Files court document scheduling auction of its core stores.
Jan. 8, 2016: Scheduled date for auction of core stores.