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Albertsons will pay Haggen $5.75 million to settle billion-dollar lawsuit

Albertsons, which originally sold several stores to Haggen in a deal that eventually led to Haggen filing Chapter 11 reorganization in September, has bid to buy back 12 stores in Washington.
Albertsons, which originally sold several stores to Haggen in a deal that eventually led to Haggen filing Chapter 11 reorganization in September, has bid to buy back 12 stores in Washington. AP

Grocery chains Haggen and Albertsons have reached a court settlement over the sale of 146 stores that eventually led Haggen into Chapter 11 bankruptcy.

Albertsons has agreed to make a cash payment of $5.75 million to a trust formed by the creditor committee sorting through Haggen’s bankruptcy, according to a Jan. 22 filing with the U.S. Securities and Exchange Commission. The filing also says an agreement was made to allow an $8.25 million unsecured claim by Albertsons against Haggen to be recognized in the bankruptcy.

The settlement stems from a lawsuit filed by Haggen in September claiming up to $1 billion in damages from the sale of the stores to Haggen. In that 55-page complaint, Haggen alleged that Albertsons engaged in “coordinated and systematic efforts to eliminate competition and Haggen as a viable competitor in over 130 local grocery markets in five states.”

Albertsons had also sued Haggen in July for about $41 million for unpaid inventory. If the latest settlement is agreed to by the bankruptcy court, the inventory suit would be dismissed, said Brian Dowling, a spokesman for Albertsons.

Albertsons released a company statement commenting on the agreement, saying that “Although we firmly believe that the claims asserted lacked any merit, the settlement enables us to avoid costly litigation. We are pleased to put this matter behind us and continue to focus on making our stores the favorite local supermarket for shoppers in every neighborhood we proudly serve.”

Haggen officials had no comment on the settlement.

With the two lawsuits apparently settled, Haggen officials can now focus on its Chapter 11 bankruptcy case. The company is scheduled to auction off its 33 remaining core stores on Friday, Feb. 5. The deadline for the company to name a baseline bidder passed on Thursday, Jan. 21, with no bidder being named. The auction is expected to draw plenty of interest from investors and other grocery companies because the remaining stores are considered profitable, according to bankruptcy court documents.

Haggen purchased 146 stores from Albertsons and Safeway last year to help satisfy a Federal Trade Commission requirement that Safeway and Albertsons shed some stores before they merge. Haggen struggled mightily in converting those stores, leading to the bankruptcy filing in September.

Dave Gallagher: 360-715-2269, @BhamHeraldBiz

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