Haggen Holdings seeks approval of trade arrangement with Unified Grocers

By Mark Reccek

Bethlehem, Pa., Oct. 15 – Haggen Holdings LLC requested court approval of a vendor trade arrangement with Unified Grocers, Inc., according to a motion filed Wednesday with the U.S. Bankruptcy Court for the District of Delaware.

According to the motion, Unified Grocers supplied to Haggen merchandise, food products, non-food items and services pursuant to the supply agreement. On Sept. 8 Unified Grocers terminated the agreement.

Unified Grocers is listed as one of the debtors’ top 30 largest unsecured creditors, with a potential claim of approximately $14.8 million.

“Through the course of these settlement discussions, the debtors determined it would be in the best interests of their estates and creditors to continue their relationship with Unified Grocers, pursuant to the terms of the trade arrangement and subject to the approval of the court,” the motion added.

The key terms of the trade arrangement include:

• Haggen will source all perishable items that Unified Grocers carries for other retailers, except as mutually agreed. Also, Unified Grocers’ prior rates will apply to all categories, with a minor surcharge, and the company will pay Unified Grocers a weekly flat fee, however, the fee will end when shipments to the Pacific Southwest stores cease;

• Unified Grocers’ prior rates will apply to 17 of the company’s core stores, with Unified Grocers continuing as the primary supplier for the stores. Also, the company will retain the right to transition to another supplier for the core stores upon 45 days’ notice to Unified Grocers, after which Unified Grocers will have the right to terminate shipping upon 21 days’ notice. The company will also provide Unified Grocers with the opportunity to bid on any supply arrangements for the core stores;

• Any remaining pre-petition funds held by Unified Grocers will be applied to the pre-petition claims held by Unified Grocers, and the parties agree that on or before the date of the final order, Unified Grocers will provide the company with a roll-forward shipping summary statement from Aug. 3, and that summary will reflect payment application between Haggen, Inc., Haggen Opco North LLC and Haggen Opco South LLC;

• Haggen will pay for deliveries of items, and Unified Grocers and the company agree to reduce or increase the deposit upon the closing of stores or changes in purchases. Unified Grocers also will return to the company all amounts on deposit at such time when purchases of perishable items cease;

• Haggen will not pursue potential claims or causes of action arising against Unified Grocers;

• Haggen will make payments to Unified Grocers upon execution of the trade arrangement and an additional critical vendor payment to Unified Grocers within five business days of the final order being entered; and

• Haggen agrees to a Unified Grocers administrative expense claim for the balance of Unified Grocers’ pre-petition claim for goods shipped to the company.

A hearing on the matter is scheduled for Oct. 29.

Haggen, a Bellingham, Wash.-based supermarket company, filed bankruptcy on Sept. 8. The Chapter 11 case number is 15-11874.

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