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Haggen Files Chapter 11 Bankruptcy

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WHAT YOU SHOULD KNOW AS A UFCW, LOCAL 135 MEMBER

We are very much aware that our members at Haggen are under even more stress due to the news that Haggen has filed bankruptcy, and rightly so. As a result, we thought it would be in our member’s best interest to address how Chapter 11 affects our members that work at Haggen stores.

We want to reassure you that we have consulted with legal counsel regarding this and other Haggen matters, and we will continue to do what we can do to fight for our members.

  1. Haggen has filed a Chapter 11 petition, which seeks to keep the business going, rather than a Section 7 petition, which seeks to close down the company. While Haggen has very serious problems it still can remain open if it solves its problems with its vendors and its customers.
  1. The bankruptcy petition does not have any immediate effect on workers’ seniority or wage rates or other rights guaranteed by the collective bargaining agreement. Haggen has announced that it is moving to get a court order to permit it to continue paying employees’ wages during the pendency of the bankruptcy; such motions are always granted in Chapter 11 cases.
  1. The collective bargaining agreement and the grievance procedure remain in place. The Union will continue to pursue both old (pre-petition) and new (post-petition) grievances.
  1. Haggen may or may not attempt to get the Bankruptcy Court’s approval to reject the collective bargaining agreement. These motions are anything but automatic: Haggen must first bargain over any changes it wants to make with the Unions and can only obtain rejection if it proves that rejection is both necessary and fair and equitable. Even if it were to succeed in that, rejection will not wipe out current or future grievances or deny you Union representation.
  1. Filing a Chapter 11 petition triggers an automatic stay of any lawsuits and most administrative proceedings, which can only proceed either with Bankruptcy Court approval or as Bankruptcy Court claims. Bankruptcy does not, however, displace the authority of governmental agencies such as the NLRB to enforce the law.
  1. Creditors almost always have to take a discount on their claims. The law provides, however, that employees’ wage claims arising in the 180 days before the filing of the bankruptcy petition are treated as priority claims, which means that they are paid before lower priority claims and general obligations, up to a maximum of $10,000 per employee. Wage claims arising after the petition has been filed are treated even more favorably as an administrative claim, which is paid after the secured claims have been satisfied but before any priority claims are paid.
  1. Vacation pay is a trickier subject: depending on the system used to calculate vacation pay it may be earned post-petition, in which case it is an administrative claim, or in the 180 days before the filing of the petition, in which case it is a third priority claim, or more than 180 days before filing, in which case it is a “general unsecured claim.”
  1. WARN Act back pay claims are treated as wages (this pertains to those that are affected as a result of the stores that are scheduled to close).
  1. Pension benefits are largely unaffected by the bankruptcy, since Haggen does not hold the funds that it and its predecessors paid into the Food Pension fund to support those benefits.
  1. Filing a bankruptcy petition does not have any immediate effect on health and welfare coverage. Haggen might try to terminate any obligation to provide health coverage as part of a motion to reject the collective bargaining agreement; it is too early to say now whether it will try this or whether it would be permitted to do so.

Your Union is working very hard to ensure that your job and your benefits are protected, and that stores that may close or be re-sold can go to another Union company.