USA Discounters reaches $40 million settlement with 49 of 50 states

By Caroline Salls

Pittsburgh, Sept. 13 – USA Discounters, Ltd. requested court approval of a settlement under which the attorneys general, Departments of Justice or Offices of Consumer Protection of 49 of the 50 states and Washington, D.C. will have a $40 million subordinated unsecured penalty claim against the company’s bankruptcy estate, according to a motion filed Tuesday with the U.S. Bankruptcy Court for the District of Delaware.

Colorado is not a party to the settlement, because it previously settled with the company.

Before USA Discounters filed bankruptcy, some of the attorneys general launched an investigation of its business practices and organized a multi-state group to conduct discovery and engage in discussions with the company.

Collectively, the attorneys general allege that USA Discounters’ business practices have violated various state and federal consumer protection laws under which the attorneys general are empowered to seek injunctive relief, restitution, damages, penalties and costs.

Under the proposed settlement, the attorneys general agreed to suspend all pending consumer protection investigations and other proceedings related to consumer protection violations and not to file any consumer protection lawsuits.

A hearing is scheduled for Oct. 4.

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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