The next chapter in the Haggen store closure and bankruptcy saga arrived this week as the embattled supermarket retailer received multiple bids for some of its Southern California locations.
Most prominently, Gelson’s Markets, a purveyor of fine foods at its 18 specialty grocery stores, announced its intention to bid on eight Haggen locations, including the Laguna Beach store, at a bankruptcy auction in November.
“Should our bid prove successful, it will be a benefit for thousands of shoppers who value quality products and exceptional service,” Gelson’s President and Chief Executive Rob McDougall said in a statement.
The locations in five counties also include stores in Santa Monica, Ladera Ranch, Rancho Mirage, Carlsbad, Del Mar, Pacific Beach and Thousand Oaks.
Warehouse grocer Smart & Final also bid $56 million for 28 more Haggen leases.
Court documents show no other formal bids as of Wednesday, Oct. 7. Bids for Haggen stores and assets are due Oct. 26. The bid process will be overseen by is Judge Kevin Gross in U.S. Bankruptcy Court in Delaware. A hearing is scheduled next week, Thursday, Oct. 15.
Store employees heard talk of other possible bidders, including Stater Brothers, which operates 168 supermarkets. Requests for comment were unreturned. A company spokesperson for Publix, an East Coast concern with 1,103 store locations, called the possibility of a bid “just a rumor.”
In its motions, Haggen asked for the court for approval of the Gelson’s and Smart & Final deals.
If the court approves the 36-store sale, Gelson’s McDougall sees an opportunity for Haggen workers, some of whom were laid off earlier, at the eight new locations. “We would welcome the opportunity to have Haggen store employees join the Gelson’s family, and foresee growth opportunities for our associates.”
The Haggen saga must be one of the quickest corporate takeover implosions. Earlier this year, Haggen rolled out of the Pacific Northwest with an expansion involving 146 stores purchased from Albertson’s due to its merger with Safeway.
With price-sensitive customers, the Haggen chain proved uncompetitive against a host of rivals. Just six months removed from entering the Southern California market, Haggen is hastily retreating to its roots in Washington.
“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 Chief Executive Officer John Clougher.
The road will be bumpy for Haggen with competing lawsuits between their organization and Albertson’s, the bankruptcy filing and a mass of creditors. According to a Wall Street Journal report, “Haggen’s top-ranking debt is a $154 million loan from PNC Bank, which is leading the syndicate of proposed chapter 11 financiers. Trade debt stands at about $91.4 million.”
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