Stores spat has staff concerned for their future

staff at the Haldanes store in Forfar are facing an uncertain future after a war of words and legal actions has broken out between the Co-operative Group and the “new kid on the block”, writes Janet Thomson.

Haldanes hit the high street in 2009 as the first mid-size supermarket chain to open for business in Britain for nearly 30 years.

The new company bought over the former Somerfield Store on the corner of Myre Road from the Co-operative Group, securing the 19 jobs when it re-opened in February 2010.

At the time Haldanes Stores acquired 13 outlets throughout the UK in one week, including Somerfield in Forfar, bringing the number of stores in the independent chain to 18.

The company bought stores from the Co-operative group, which agreed with the Office of Fair Trading (OFT) to off-load 133 outlets in centres where it already had stores, following its acquisition of Somerfield.

At the time the Co-operative also operated stores in Academy Street and in Dundee Road.

However, the sale does not appear to have gone smoothly with implications for the store, and jobs.

A press report last Thursday revealed a major rift between the two parties and, when contacted by the Dispatch and Herald, claim and counter-claims were issued.

Details of the problems hit the headlines after Arthur Harris, CEO of Haldanes Stores Ltd. and Ruston Retail Ltd, (together Haldanes) issued a statement last Wednesday revealing they had issued proceedings in the High Court against the Co-operative Group Limited from which Haldanes acquired 26 stores in late 2009/2010.

Haldanes alleges the Co-op has materially breached key terms of the agreements and that the Co-op’s actions amounted to “breaches of undertakings” the Co-op gave to the OFT.

Arthur Harris said: “Haldanes alleges that these breaches have severely damaged the business it acquired from the Co-op, not only causing it significant financial loss, but also causing harm to consumers.

“If we had been made fully aware of the true trading picture from the outset, we would not have done the deal with the Co-op.

“We have been trying to set up a meeting with the Co-op since mid-September 2010 to discuss the issues and seek a resolution but have been consistently ignored or refused by Co-op’s senior management. As such we have been left with no option but to issue legal proceedings.”

As news of the problems filtered through to the Forfar store, the Co-operative Group issued a statement in response last Thursday.

The Group confirmed it had started legal proceedings against Haldanes Stores Ltd. in April 2011 to recover possession of a number of the 26 stores Haldanes bought from the group after its acquisition of Somerfield.

The statement continued: “Our decision to take legal action followed Haldanes’ failure to pay rents owing to the Group and was made reluctantly after other avenues had been exhausted.

“The stores in relation to which we have taken legal action were amongst the batch we were obliged to dispose of to meet our undertakings to the Office of Fair Trading in connection with our acquisition of Somerfield. As a result, we have briefed the OFT given its close involvement at the time.

“Haldanes has indicated in a press release that it has issued proceedings against the Co-operative Group, however, no proceedings have been served on the Group at the time of releasing this statement. Should they be served, we intend to contest them vigorously.

“The Co-operative Group has acted in good faith throughout its dealings with Haldanes and categorically refutes all allegations of impropriety. The original transaction was subject to full due diligence on the part of Haldanes and its advisers. The Co-operative Group has complied with all our competition undertakings and, at the same time, has been pleased to support the Haldanes business financially through its start-up phase.

“We have no further comment to make at this stage.”

However, in another twist Haldanes came back with a further statement on Friday in which Arthur Harris said that, whilst he didn’t want to become embroiled in “trial by media”, he felt it is very important that the “correct facts” are produced.

He admitted the Co-op were “technically correct” in stating they issued proceedings before Haldanes.

However, he added the modern justice system in the UK is based on trying to avoid litigation on the basis that mediation is better and to those ends a “Letter before Claim” was served to the Co-op’s lawyers on March 23, 2011, approximately three weeks before the Co-op served any notices or proceedings against Haldanes.

He said: “I believe the action the Co-op took in April 2011 by issuing proceedings for rent was a direct result of Haldanes having already issued the aforementioned “Letter before Claim”.

“Their actions left us with no option but to issue formal proceedings, and even up to half an hour before we issued those, I e-mailed the Co-op once again to request a meeting.

“I still believe we can sort this out, if only they would meet with me.”

He went on to say: “It is true that Haldanes owes the Co-op rent. The rent owed is just a percentage of the claim we are making. If the Co-op were so concerned about their rent, why not have a meeting with us to understand our position and why we are making the claims.

“It has already been publicly documented and reported that the sales within the Somerfield portfolio acquired by the Co-op could not be sustained after the take-over by the Co-op.

He concluded: “It is also very well documented that a number of well known and well respected retailers who purchased other stores from the divestment programme, just as Haldanes did, have also suffered similar problems and in quite a number of cases have had to close those stores down. We are in contact with and have the support of a number of those retailers.”