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BELLINGHAM, Wash. — Haggen Inc. has filed for Chapter 11 bankruptcy protection, as the food and drug retailer has struggled since expanding into California via the acquisition of Albertsons and Safeway stores late last year.
The filing came a week after Haggen filed a lawsuit against Albertsons LLC and Albertsons Holdings LLC that seeks more than $1 billion in damages.
In the suit, Haggen claimed that following its December 2014 acquisition of 146 Albertsons and Safeway stores, Albertsons engaged in “coordinated and systematic efforts to eliminate competition and Haggen as a viable competitor in over 130 local grocery markets in five states” and “made false representations to both Haggen and the FTC about Albertsons’ commitment to a seamless transformation of the stores into viable competitors under the Haggen banner.”
Albertsons had previously sued Haggen for allegedly not paying for merchandise that was acquired with the stores.
Albertsons had sold the stores to Haggen to win clearance from the Federal Trade Commission for its acquisition of Safeway Inc., which was completed in January.
The deal transformed Haggen from a small chain of 18 stores with 16 pharmacies in Washington and Oregon to a multistate retailer of 164 stores with 106 pharmacies mainly in Washington, Oregon and California but also in Nevada and Arizona, where consumers were unfamiliar with the banner.
Haggen has struggled to win over consumers in the new markets, and in August the company announced plans to close 27 stores as part of what it described as a “right-sizing strategy.”
