USA Discounters committee opposes extension, cites unnecessary delay

By Caroline Salls

Pittsburgh, April 5 – USA Discounters, Ltd.’s official committee of unsecured creditors objected to the company’s proposed exclusivity extension, asking the court to deny the extension and allow the committee to “file a liquidating plan that preserves value for all stakeholders,” according to a Tuesday filing with the U.S. Bankruptcy Court for the District of Delaware.

The committee said all that is left to be done in USA Discounters’ case is to file a liquidating plan that establishes a trust to collect receivables, reconcile claims and make distributions to creditors.

“Although the debtors have achieved the goals established at the outset of these cases, the February 8 deadline to file a plan has come and gone and the debtors are no closer to confirming a plan than they were on the petition date,” the committee said in the objection.

“Despite the fact that there have been no material developments or unforeseen circumstances, the debtors and the lenders, without consulting the committee, have repeatedly extended the timeline to exit bankruptcy with no end in sight.

“Based on the debtors’ and the lenders’ stated reasons for the continued delays, it is highly unlikely that a debtor-proposed plan will be filed, much less confirmed, before year-end.”

According to the objection, USA Discounters claims no plan can be filed until claims by state attorneys general and one consumer arising from the company’s past business practices are fully resolved.

However, the committee said “there is nothing unique or extraordinary about a debtor being subject to regulatory investigations and having unresolved liabilities that justifies a prolonged stay in bankruptcy.”

The creditor group said the cost of the prolonged stay in Chapter 11 envisioned by the company and the lenders is significant and is severely eroding recoveries for all of stakeholders. Specifically, as of Tuesday, the committee said the company had spent $9 million in Chapter 11 costs.

“Each month that passes costs the estates an additional $1.3 million, an amount that far exceeds the amount that would be incurred if the estates’ assets and liabilities were transferred to a trust pursuant to a liquidating plan,” the committee said.

“Current projections reveal that the administrative costs of these cases will double as a result of the delay.”

USA Discounters, a Norfolk, Va.-based retailer, filed for bankruptcy on Aug. 25, 2015. Its Chapter 11 case number is 15-11755.

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