retail news in context, analysis with attitude

The Seattle Times reports that United Food and Commercial Workers (UFCW) "is getting a seat at the table on the struggling grocery chain’s bankruptcy reorganization, although it’s unclear how much influence it will be able to exert in the process."

The UFCW is one of seven members of an unsecured creditors committee authorized by the bankruptcy court overseeing its case, designed to "represent the dozens of parties to whom Haggen owes money, but whose claims are not backed by collateral assets. In bankruptcies like this one, these parties, usually suppliers, workers and service providers, tend to get the short end of the stick." Other members include companies such as Unified Grocers, PepsiCo, Starbucks, Santa Monica Seafood and Valassis.

According to the story, "Experts say the committee can play a sizable role when a company reorganizes under bankruptcy because it gets privileged access to information that can allow it to push for changes. Tom Geiger, a spokesman for UFCW Local 21, in Western Washington, says that the committee can employ lawyers and financial experts to closely monitor the company’s actions and gives the union 'more leverage' in the process."

Haggen has more than 11,000 employees in the western US, all of whom now have to deal with the disastrous results of the company's decision to go from an 18-store Pacific Northwest retailer to one with 164 stores reaching to California, Arizona and Nevada, all of them made available when Albertsons acquired Safeway and had to divest stores for antitrust purposes. Since that expansion, Haggen has seen nothing but nine miles of bad road because of high prices, poor sales, dismal profits, persistent out-of-stocks, and contentious relationships with suppliers worried about not getting paid.
KC's View:
I think that there's a pretty good rule that we can apply to this situation. Everybody is going to get screwed except for the investment bankers and lawyers.