The Haggen drama has yet to subside, it seems. Today the West Coast retailer announced it had filed voluntarily for Chapter 11 Bankruptcy in order to reorganize around its core profitable stores. The company also has decided to part ways with its former Co-CEO and U.S. Southwest executive Bill Shaner.
“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,” said John Clougher, Chief Executive Officer of Haggen. “The action we are taking today will allow us to continue to serve our customers and communities while providing Haggen with a process to re-align our operations to be positioned for the future.”
Clougher will be the sole leader of the company now that Shaner is no longer with the company. Shaner’s last day was Thursday, a spokeswoman for Haggen said.
Following the filing at the U.S. Bankruptcy Court for the District of Delaware in Wilmington, Haggen has received commitments for up to $215 million in debtor-in-possession financing from existing lenders to maintain operations and the flow of merchandise to its stores during the sale process.
According to a press release, the company has made customary first-day motions with the Bankruptcy Court intended to support the continuation of its day-to-day operations for customers, employees, vendors and suppliers, and other business partners during the restructuring. Haggen is currently seeking Court approval to continue employee wages and certain benefits and honor certain customer programs. The company expects the Court to address these concerns in the coming days.
Investment bank Sagent Advisors has been chosen to market for sale locations in the five states it operates and to explore market interest for various store locations. Discussions are underway with interested parties to sell many of the company’s remaining assets, Haggen says.
Haggen’s announcement comes on the heels of the company filing a $1 billion lawsuit against grocery chain Albertsons. In December of 2014, Haggen purchased 164 Albertsons locations, multiplying the chain’s standing by more than 10 times. According to allegations by Haggen, Albertsons failed to live up to good faith agreements that it would convert the locations in a timely manner. This “ultimately led to Haggen’s failure,” the company said in a written statement, and ultimately led to the Chapter 11 filing.