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Creditors of bankrupt Pacific Northwest grocer Haggen have filed a lawsuit against Comvest, the private equity firm that owned it, claiming its acquisition of 146 Albertsons stores last year, which ultimately led to a failed expansion, was part of a plan to “siphon away” prized real estate.
The plan, The Oregonian reported, was intended to enrich Comvest while ensuring creditors would be powerless against the firm in bankruptcy court. The lawsuit alleges that Comvest transferred Haggen’s most profitable real estate, valued at more than $100 million, to a subsidiary not listed in the Haggen bankruptcy case as a debtor. Therefore, the holdings received protection from the bankruptcy proceedings and creditors, who are still due about $100 million.
Creditors claim Comvest used the "sale-leaseback" stunt to siphon cash from the real estate, the lawsuit claims. If a retailer owns its store, rather than leasing it, it can sell the property and lease it back from the new owner, allowing the company to continue operating without introduction while adding a cash infusion for the retailer. However, the company becomes responsible for regular lease payments, an additional expense.
In the lawsuit, Comvest is accused of defrauding the creditors, unjust enrichment and breach of fiduciary duty. It asks for judgements for the value of transferred assets.