Oak Harbor’s Haggen store is among the 33 “core” locations that the Bellingham-based grocery chain won court approval Friday to try selling as part of its bankruptcy.
Though the auction could spell the end of Haggen as a grocery company, it does not necessarily dictate the Oak Harbor store’s closure — with the possible loss of 85-plus jobs — or even the end of the Haggen name on grocery stores, one expert said.
Delaware bankruptcy court Judge Kevin Gross set Feb. 5 as the auction date for Haggen’s 33 core stores in Washington and Oregon, including the store on State Highway 20 in Oak Harbor.
The sales are part of the Chapter 11 reorganization-oriented bankruptcy Haggen filed Sept. 8.
Haggen said Friday that the stores are profitable and should attract buyers.
“The Haggen group of core stores is well run with great staff and is located in great communities,” Haggen said in a prepared statement. “As a group they are profitable. Because of this, we know there will be strong interest in our stores as a group. Our stores are staffed and stocked to high standards.”
It may be premature to mourn the Oak Harbor Haggen store’s passing. A buyer could purchase the core Haggen stores with the intention of running them under the same name, said John Rizzardi, a Seattle bankruptcy attorney familiar with the case.
“The name ‘Haggen’ could become the buyer’s intellectual property,” he said.
Another possibility is that Comvest West, a West Palm Beach, Fla., private investment firm that became the company’s major stakeholder in 2011, could win the auction and keep the stores alive.
“It is possible that we would bid, yes, though we have not yet decided what to do,” said Louis Colosimo, a Comvest West managing director. “We’re smack in the middle of the thing right now. I can’t say yet what we will or won’t do.”
Sale of the core stores does most likely spell the end of Haggen as a company, Rizzardi said. “In terms of the company as we know it, one that operates grocery stores, it will probably go away.”
Oak Harbor store manager Sherrie Sadighi declined Monday to comment on news of the sell-off decision or to say how many people the store employs in total.
About 85 non-management employees there are represented the United Food and Commercial Workers International Union, said union spokesperson Tom Geiger.
“Obviously we don’t know what the outcome of the auction will be, but we’re telling employees we’re working hard to get the stores bought by a good union grocer so that jobs continue,” Geiger said. “By and large, that has worked out for the non-core stores.”
A top Oak Harbor official reacted calmly to news of Haggen’s sell-off plans.
“If Haggen can’t find a good home in Oak Harbor, something tells me there’s another business that can,” said outgoing Oak Harbor Mayor Scott Dudley. “If it ends up closing its doors, obviously we’ll be doing everything we can to attract another business to town.”
Shoppers were a little more agitated by news of the possible closure.
“Compared to Safeway, this is less crowded, it has the brands I like and it’s easier to park,” said Monique Kirschten of Oak Harbor. “I would be very unhappy if it went away.”
Judy Craft, also of Oak Harbor, said Haggen “is clean, well-organized and open-feeling. I’ve done comparison shopping with Safeway, and some prices are higher, but I don’t mind. I hope they don’t close it.”
Haggen’s original intention in filing for Chapter 11 bankruptcy protection on Sept. 8 was to reorganize and build future profitability around its core stores. It said then that it would shut down only 27 stores in Arizona, California, Nevada, Oregon and Washington within the following two months.
Of Haggen’s 35 stores in Washington, at that time only one — in Spanaway, near Tacoma — was set to close.
Friday’s development indicates a complete corporate retrenchment, agreed Rizzardi, the bankruptcy expert.
The Haggen Oak Harbor store has a complex back story.
Haggen bought the former Oak Harbor Safeway store in December 2014. Safeway sold it as part of a 168-store divestment of Safeway and Albertson stores. The divestment was required so that Albertson could merge with Safeway, a deal completed on Jan. 30.
When Haggen bought the Oak Harbor Safeway store, virtually all Safeway employees became Haggen employees, said Sadighi, the Oak Harbor Haggen store’s manager, in an earlier interview.
Safeway in the summer of 2015 replaced the Albertsons store on Southwest Erie Street. All Albertson employees were given a chance to become Safeway employees.
Haggen got itself into these dire straits by rapidly buying up Albertson and Safeway stores. It expanded from 18 stores with 16 pharmacies to 164 stores with 106 pharmacies, and from 2,200 employees to more than 10,000, it said in December 2014.
Haggen is marketing the 33 core stores as a group and hopes to sell them in that fashion, said a source close to the proceedings who asked not to be named because of the pending litigation.
Bids for the stores are due Jan. 29. Following the Feb. 5 auction, the winner will be notified by Feb. 8, and a final hearing on the sale is set for Feb. 17.
