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Grocer Haggen files bankruptcy, fires Southwest CEO

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Grocer Haggen files bankruptcy, fires Southwest CEO

  •  A photograph posted on Haggen's Instagram page shows a California store being rebranded earlier this year.
    A photograph posted on Haggen's Instagram page shows a California store being rebranded earlier this year.

Just a week after suing Albertsons for $1 billion, grocery chain Haggen has filed for bankruptcy protection and parted ways with an executive who led the company's dramatic expansion that saw it take on new 146 stores, a burst from just 18 locations a year ago.

The Pacific Northwest grocer bought the stores, including three in Tucson, from Albertsons as that company was forced to divest locations in a giant merger with Safeway earlier this year.

Haggen has since closed two of the Tucson locations, among 27 in several states it shuttered last month.

The company has parted ways with Pacific Southwest regional CEO Bill Shaner, who oversaw the expansion since his hiring last December.

Haggen said Tuesday night that it was in talks to sell "many of the company's remaining assets." The struggling company is seeking Chapter 11 bankruptcy protection against creditors, whom are owed some $50 million.

"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," CEO John Clougher said in a statement. "The action we are taking today will allow us to continue to serve our customers and communities while providing Haggen with a process to realign our operations to be positioned for the future."

Clougher, who had split executive duties with Shaner, is now the company's sole CEO, Haggen said.

The union for grocery workers cautioned the company against cutting workers or pay.

"Our union family will do everything in our power to protect the livelihoods of every member," said a statement from the United Food and Commercial Workers.

"We expect Haggen to do what is right by their hard-working employees and their families," the union said.

Haggen owes $50 million-$100 million to as many as 5,000 creditors, a figure equal to its assets, according the the bankruptcy filing.

Last week, Haggen sued Albertsons for $1 billion, alleging anti-competitive practices and fraud in the wake of a deal that saw the chain take over 146 Albertsons and Safeway stores as those companies merged.

Haggen, owned by private equity firm Comvest Partners, paid about $300 million for the stores throughout the West earlier this year.

Albertsons was forced to divest 168 stores in all due to regulatory concerns about monopoly positions in certain markets as that company took over Safeway earlier this year in a $9.4 billion deal

According to Haggen's court filings, 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,” and “made false representations to both Haggen and the FTC about Albertsons’ commitment to a seamless transformation of the stores into viable competitors under the Haggen banner.”

In July, Albertsons sued Haggen for allegedly failing to pay for about $41 million in inventory that was transferred in the store takeovers. The company denied the allegations in Haggen's suit.

In July, Albertsons began making moves to go public, filing paperwork with the Securities and Exchange Commission for a proposed initial public offering that is likely to be worth billions. Some financial analysts have said the company could have a market capitalization of $16 billion.

A former Albertsons rebranded by Haggen has remained open at 1350 N. Silverbell Rd., but the company said in August that "additional stores may be sold or closed in the future."

Earlier this year, the company grew by leaps and bounds, acquiring 146 stores in five states as a result of Albertsons' recent swallowing up of Safeway. Twenty-seven stores were on the list of those to be closed by the company.

The Tucson stores were rebranded in May.

Haggen, an upscale grocery often compared to Whole Foods (if slightly less costly), also took over Arizona stores in Scottsdale, Anthem, Prescott, Prescott Valley, Lake Havasu City, and Flagstaff. Stores in Anthem, Flagstaff and Prescott Valley were also on the list of those to be closed.

Prior the the purchase, the chain had only 18 stores in Oregon and Washington. The deal, prompted by regulatory concerns in Albertsons $9.2 billion merger with Safeway, had Haggen buy 146 of the 168 stores divested by the grocery giants. The expansion meant Haggen's workforce grew from 2,000 to about 10,000, with 164 stores throughout the West.

Haggen was family-owned from its 1933 founding until 2011, when a majority interest was handed over to private investment firm Comvest Partners. Albertsons, now the second-largest grocery chain in the nation following its takeover of Safeway, is owned by Cerberus Capital Management.

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albertsons, haggen, safeway

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