Future of Oak Harbor Haggen an uncertainty

It remains unclear whether Haggen’s bankruptcy filing on Tuesday will affect the recently opened Haggen store in Oak Harbor.

It remains unclear whether Haggen’s bankruptcy filing on Tuesday will affect the recently opened Haggen store in Oak Harbor.

“I have heard nothing about it. I know nothing,” store manager Sherrie Sadighi said Wednesday.

A spokesperson for Haggen said last week that as part of the bankruptcy proceedings, “the company will evaluate potential sales/closures as part of its right-sizing strategy.”

“It would be really terrible if Haggen closed down,” Oak Harbor shopper Roya Devenport said last week outside the store.

“The pricing is higher than at other stores, but their bakery is the best in town and their meat is excellent. It has items I want that you can’t get anyplace else.”

The Bellingham-based grocery chain filed for Chapter 11 reorganization, a form of bankruptcy that envisions future profitability. The filing will help the 82-year-old company “reorganize around its core profitable stores,” it said in a prepared release.

In mid-August, Haggen said it would close or sell 27 stores in Arizona, California, Nevada, Oregon and Washington within the next two months. Of Haggen’s 35 stores in Washington, only one — in Spanaway, near Tacoma — was set to close as of mid-August.

In Chapter 11 bankruptcies, the debtor typically is unable to service its debt or pay its creditors and is protected from collection attempts and litigation. It retains control of its business operations, though it is under the oversight of the bankruptcy court.

Haggen has received commitments for up to $215 million in financing from its existing lenders to maintain operations while it tries to sell off stores, it said.

“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 the release.

The reorganization “will allow us to continue to serve our customers and communities while providing Haggen with a process to realign our operations for the future,” he said in the press release.

Haggen blames rival grocery chain Albertsons for the bankruptcy. Haggen grew from an 18-store regional grocer to 164 stores through buying Albertsons and Safeway stores in December 2014, it said in its release.

Converting those stores to Haggen stores “made Albertsons’ cooperation and good-faith implementation of the terms of the deal … essential, [but] this did not occur.”

That alleged breach led to the recent filing of a lawsuit, Haggen claims. “Albertsons’ actions ultimately led to Haggen’s failure … to convert newly acquired stores, resulting in the Chapter 11 filing.”

In Oak Harbor, Haggen bought the Safeway store on State Highway 20 early this year. Virtually all Safeway employees became Haggen employees, said Sadighi, the Haggen store’s manager.

Safeway this summer replaced the Albertsons store on Southwest Erie Street. All Albertsons employees were given a chance to become Safeway employees.

Albertsons and Safeway completed their merger on Jan. 30. They were required to divest themselves of 168 stores in order to win federal approval of the merger, according to a Safeway press release. The Oak Harbor Albertsons was among those stores divested.

Haggen faced challenges at its new stores. Newspapers in California and Arizona reported customers complained about the cost of Haggen compared to other grocery stores. High prices at the Oak Harbor Haggen is also a familiar refrain, though some praise the quality of the store’s offerings.

Haggen has between 1,000 and 5,000 creditors and has both assets and liabilities of between $50 million and $100 million, according to court filings. It estimated that it does have the funds to pay even its unsecured creditors.

Among Haggen’s top creditors are distributor Unified Grocers, to which it owes $14.9 million; food supplier Topco Associates ($5.7 million); and real estate investment firm Merlone Geier ($5.7 million), according to court filings. It has 29 major creditors, not counting Albertsons, which it listed because of the litigation under way.