USA Discounters files Chapter 11 bankruptcy to distribute proceeds

By Caroline Salls

Pittsburgh, Aug. 25 – USA Discounters, Ltd. filed Chapter 11 bankruptcy Tuesday in the U.S. Bankruptcy Court for the District of Delaware to dispose of its assets, including receivables and inventory, and distribute the resulting proceeds among stakeholders.

Vice president Timothy W. Dorsey said in a statement filed with the court that continuing difficulties in the retail sector, including conditions related to military customers, and roughly $60 million of secured debt that is in default and maturing in October “create enormous challenges for USA Discounters' ability to continue operating in its present form.”

To date, Dorsey said the company has not located a party willing to purchase the entire business as a going concern.

As a result, Dorsey said USA Discounters’ board and senior management have concluded that “there is no viable route through which to rehabilitate the business model and allow it to continue operating as a standalone entity outside of the bankruptcy process.”

In connection with the filing, the company is seeking approval to use the cash collateral of its pre-bankruptcy lenders and agent to fund its operations while in bankruptcy.

The interim cash collateral hearing is scheduled for Aug. 26.

In addition, the court scheduled a hearing for Sept. 18 for USA Discounters to show why the Chapter 11 cases should not be transferred to “the Eastern District of Virginia, the District of Colorado or some other appropriate venue.”

According to court documents, USA Discounters has $100 million to $500 million in assets and $50 million to $100 million in debt.

The company did not list any unsecured creditors with claims of $1 million or more.

The company is represented by Pachulski Stang Ziehl & Jones LLP.

USA Discounters is a Norfolk, Va.-based retailer. The Chapter 11 case number is 15-11755.

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