Independent supermarket chain Haldanes has "withheld rent" from The Co-operative Group to make the society take notice of allegations that the Co-op "materially" breached terms of its agreement when it sold 26 former Somerfield stores to Haldanes in late 2009.
The admission follows an astonishing attack on The Co-op Group this week by Haldanes chairman Arthur Harris, who alleged that the society "sold me, customers in 26 local markets, and quite possibly 600 of their former employees down the river" when the stores were sold.
"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," said Harris. "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."
Harris claimed he had "issued proceedings in the High Court" against the society.
However, The Co-op Group countered that it had started its own legal proceedings against Haldanes in April "to recover possession of a number of the 26 stores they bought from us after our acquisition of Somerfield".
"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 Co-op Group said in a statement. The society added that it was yet to receive proceedings from Haldanes, but "should they be served, we intend to contest them vigorously".
Harris said The Co-op Group's claim related to "specific disputes at two particular stores". He told The Grocer: "We have a substantial claim that the Co-op won't discuss with us so we have withheld rent in a bid to get them to talk to us. They have responded by flatly refusing to discuss the issues, instead choosing to take the legal route."
Haldanes was formed in October 2009 when it acquired four Somerfield stores in Scotland from The Co-op Group. The stores were from a batch of 133 stores that the society was forced to divest by the Office of Fair Trading in order to acquire Somerfield. Haldanes quickly expanded, buying a further 22 Somerfields from the society. However, two stores have since closed and a third failed to open. A further two have recently been relaunched under the chain's new discount fascia Ugo, which is a separate company and unaffected by the legal proceedings.
Harris admitted Haldanes branded stores were struggling. He declined to reveal trading figures but said: "Over the past four months, through another of my companies, I have had to invest £2m into Haldanes to ensure the business could continue."
The admission follows an astonishing attack on The Co-op Group this week by Haldanes chairman Arthur Harris, who alleged that the society "sold me, customers in 26 local markets, and quite possibly 600 of their former employees down the river" when the stores were sold.
"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," said Harris. "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."
Harris claimed he had "issued proceedings in the High Court" against the society.
However, The Co-op Group countered that it had started its own legal proceedings against Haldanes in April "to recover possession of a number of the 26 stores they bought from us after our acquisition of Somerfield".
"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 Co-op Group said in a statement. The society added that it was yet to receive proceedings from Haldanes, but "should they be served, we intend to contest them vigorously".
Harris said The Co-op Group's claim related to "specific disputes at two particular stores". He told The Grocer: "We have a substantial claim that the Co-op won't discuss with us so we have withheld rent in a bid to get them to talk to us. They have responded by flatly refusing to discuss the issues, instead choosing to take the legal route."
Haldanes was formed in October 2009 when it acquired four Somerfield stores in Scotland from The Co-op Group. The stores were from a batch of 133 stores that the society was forced to divest by the Office of Fair Trading in order to acquire Somerfield. Haldanes quickly expanded, buying a further 22 Somerfields from the society. However, two stores have since closed and a third failed to open. A further two have recently been relaunched under the chain's new discount fascia Ugo, which is a separate company and unaffected by the legal proceedings.
Harris admitted Haldanes branded stores were struggling. He declined to reveal trading figures but said: "Over the past four months, through another of my companies, I have had to invest £2m into Haldanes to ensure the business could continue."
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