Haggen Grocery Chain Files for Bankruptcy Protection

The small grocery-store chain Haggen has filed for bankruptcy protection.

The Bellingham Herald reports that Chief Executive John Clougher said the reorganization will allow the Bellingham-based Haggen to continue to operate while enabling the grocer to re-align its operations. Creditors have committed up to $215 million to keep the company running while it sells stores.

Haggen filed for Chapter 11 protection on Tuesday.

The struggling grocer, which went from a family business to a West Coast power virtually overnight after buying 146 stores from Albertsons, released a statement saying it would focus on profitable core stores while in talks to sell many of the company's remaining assets. 

The company has a financial commitment of $215 million in financing from its existing lenders to maintain operations and the flow of merchandise to its stores.

"If you don't have all the pieces in place, maybe they just tried to get in too quickly," said San Diego State marketing professor Miro Copic.

Earlier this month Haggen sued Albertsons for more than $1 billion in damages, alleging the supermarket giant engaged in systematic efforts to eliminate it as a viable competitor in five states.

The lawsuit, filed in federal court in Delaware, accused Albertsons of anti-competitive practices. Albertsons said the lawsuit was without merit.

Earlier this year, Haggen bought 146 Albertsons and Safeway stores, expanding from 18 stores in Oregon and Washington into new markets in California, Nevada and Arizona.

"They want to be profitable and where they are having success they want to make sure they continue that success," said Copic.

To do that, Copic says they need to built trust with customers.

"And they will fail if they don't do that in the short term," said Copic.

Copyright AP - Associated Press
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