By Hector Gonzalez
Special to The Lookout

October 7, 2015 -- If a bankruptcy court judge signs off on the deal, a Haggen store on Lincoln Boulevard in Santa Monica could become a Gelson's, company officials said this week, announcing the pending sale of 36 Haggen stores in California and Nevada.

First, however, the court must approve Haggen's proposal to auction off its assets to the highest bidder. Second, Gelson's bid needs to beat all other offers.

A hearing on its auction plans is scheduled on October 19. Interested companies will need to notify the court of their intentions to bid by no later than October 26, with final bids due by November 2, Haggen spokeswoman Deborah Pleva said in a release.

The auction is scheduled November 9. A hearing on the results of the auction is set for November 24. All the dates are subject to court approval, Pleva said.

Meanwhile, two companies, Gelson's and Smart & Final, have entered into “stalking horse” purchase agreements with Haggen, meaning their bids for Haggen properties will set the starting point for bidding on the 36 locations, she said.

“The sale process has been designed to be fair and transparent in order to derive the highest bid for the stores and to maximize value for the estate and creditors in an orderly process,” Pleva said.

“The procedures will allow the sale auctions to be conducted in a controlled, fair and open fashion that will encourage participation of financially capable buyers.”

Gelson's announced Monday the company signed an agreement to buy eight Haggen stores in California, including the Santa Monica store at 2627 Lincoln Boulevard.

Smart & Final agreed to purchase 28 stores in California and Nevada, according to Pleva.

Gelson’s is bidding on stores in Los Angeles, Orange, Riverside, Ventura and San Diego counties, company spokeswoman Paulette Kam said.

“We are excited at the prospect of significantly expanding our brand offerings to new communities,” said President and CEO Rob McDougall. “Our bid is subject to higher and better offers at an auction currently scheduled for the beginning of November. Should our bid prove successful, it will be a benefit for thousands of shoppers who value quality products and exceptional service.      

“Furthermore, we would welcome the opportunity to have Haggen store employees join the Gelson’s family, and foresee growth opportunities for our associates,” McDougall said.

Haggen filed for Chapter 11 bankruptcy September 8, saying it wanted to reorganize and concentrate on its “core profitable stores,” using a $215 million cash infusion from its lenders, Pleva said in a release at the time.

Founded in 1933 in Washington, the company said it wanted to focus its business around 37 core stores and a single pharmacy in the Pacific Northwest.

In just under a year, Haggen grew from 18 stores to 164 locations, after the company bought out Albertson's in December 2014. That deal went sour, and the two entities are now in court, according to Pleva.

Haggen's suit against Albertson's details “a number of Albertson's actions, which ultimately led to Haggen's failure in its efforts to convert newly acquired stores and ultimately resulting in Chapter 11 filing,” said Pleva.