This Haggen store in Santa Barbara is among 23 that are closing in the Tri-Counties.

Haggen will be able to sell all of its stores in California, Arizona and Nevada, including 36 to Smart & Final and Gelson’s Markets, a Delaware bankruptcy court ruled.

Smart & Final and Gelson’s got the first pick of the 127 shuttering Haggen stores. Commerce-based grocer Smart & Final signed a deal for 28 stores in California and Nevada. High-end grocer Gelson’s signed an asset purchase agreement for eight stores in California.

Haggen plans to close 23 stores in the Tri-Counties. Gelson’s is targeting one in Thousand Oaks at 1736 W. Avenida De Los Arboles and Smart & Final plans to take over nine throughout the Tri-Counties, including 8200 El Camino Real in Atascadero, 850 Linden Ave. in Carpinteria, 2100 Newbury Road in Newbury Park, 1191 Creston Road in Paso Robles, 1321 Johnson Ave. in San Luis Obispo, 3943 State St. in Santa Barbara, 5135 E. Los Angeles Ave. in Simi Valley, 7800 Telegraph Road in Ventura, and 5770 Lindero Canyon Road in Westlake Village.

Thrifty Payless and CVS Pharmacy are also interested in purchasing some of Haggen’s pharmacies, according to court filings.

The agreements will allow the prospective buyers to test the market prior to the auction, a process called a stalking horse offer.

Potential buyers must declare they are interested by Oct. 26 and formalize a bid by Nov. 2. An auction will occur on Nov. 9 and a hearing will take place on Nov. 24.

The United Food and Commercial Workers International Union, which represents almost 9,000 Haggen employees, opposed the plan after Smart & Final did not agree to take on their labor contracts. But the court ruled on Oct. 19 that the proposed auction would suffice.
Haggen began with 18 stores before it took over 146 Albertsons and Safeway stores throughout California, Nevada, Arizona, Washington and Oregon.

The expansion was part of an antitrust deal between Albertsons and Safeway and the Federal Trade Commission that would allow the companies’ $9.2 billion merger. Only 21 of those acquired stores remained profitable and Haggen plans to retain 37 locations, the company said.

Haggen filed for Chapter 11 bankruptcy in September. The stores will close on Nov. 24 and thousands of employees will be laid off by Dec. 8.

• Contact Alex Kacik at akacik@pacbiztimes.com.