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

Haggen is looking to sell some of its soon-to-be vacant stores in the Tri-Counties to Gelson’s Markets and Smart & Final pending bankruptcy court approval, the company announced Oct. 5.

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

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.

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

A Delaware bankruptcy court will determine in October whether Haggen, the Pacific Northwest-based grocer, will be able to go through with its Chapter 11 bankruptcy, close 100 additional locations and sell portions of the stores to interested buyers.

The court plans to review the case on Oct. 19. Potential buyers must declare they are interested by Oct. 26 and formalize a bid by Nov. 2. An auction would occur on Nov. 9 and a hearing would take place on Nov. 24, pending court approval.

Haggen began with 18 stores and one standalone pharmacy 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, Haggen said in a recent news release.

After Haggen had trouble maintaining adequate inventory and attracting customers to its newly acquired stores, it cut hours and laid off employees – including 19 developmentally disabled workers in the Tri-Counties.

The company announced it was closing an initial group of 27 stores in August.

It then filed for Chapter 11 bankruptcy on Sept. 8 to keep its stores running but the $215 million it received in debtor-in-possession financing wasn’t enough to get it out of the hole.

The stores would close around Nov. 24 and thousands of employees would be laid off by Dec. 8, the company said.

Haggen recently issued a notice stating there will be 3,430 “affected employees,” according to a document obtained by the Business Times. However, an employee at the Mesa store said 8,000 workers will lose their jobs in California alone. Haggen would not confirm the number of impacted employees.

An independent investment bank based in New York, Sagent Advisors, is handling the sale process.

• Contact Alex Kacik at akacik@pacbiztimes.com.