Former Haggen’s creditors committee agrees to Spirit claim treatment

By Caroline Salls

Pittsburgh, Dec. 6 – The official committee of unsecured creditors for the Chapter 11 case of HH Liquidation, LLC, formerly Haggen Holdings, LLC, requested court approval of a settlement reached with Spirit SPE HG 2015-1 LLC and Spirit Master Funding IV, LLC, according to a motion filed Tuesday with the U.S. Bankruptcy Court for the District of Delaware.

The committee said Haggen and Spirit entered into an asset purchase agreement and an escrow agreement on Nov. 24, 2014.

HH Operations, LLC also entered into a master lease agreement with Spirit SPE, as well as an unconditional guarantee of payment and performance under the lease agreement.

Some of the lease obligations were subsequently rejected by the Haggen entity, and Spirit was granted a $21.01 million stipulated damages claim, 12% of which was to be paid from cash upon the closing of the sale of core stores.

Spirit SPE also received a $2.62 million general unsecured stipulated damages claim, with $1.84 million of that claim entitled to administrative priority, as well as a $750,000 administrative claim.

According to the motion, the committee plans to file a plan of liquidation for the HH Liquidation cases, which would seek substantive consolidation of the cases.

The committee said Spirit objected in open court to the proposed consolidation, but agreed to negotiate the proposed settlement.

Under the settlement, Spirit would have a $2.59 million administrative claim and a $19.27 million general unsecured claim against the HH Liquidation holding company as part of the committee’s plan.

If substantive consolidation is ordered by the court, Spirit would be paid 85% of the general unsecured claim, or $18.58 million.

In exchange for this treatment, the Spirit entities have agreed to vote in favor of the committee’s plan and will not oppose substantive consolidation related to Comvest litigation.

A hearing is scheduled for Jan. 23.

Based in Bellingham, Wash., Haggen is a supermarket company. It filed for bankruptcy on Sept. 8, 2015 under Chapter 11 case number 15-11874.

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