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Retailer USA Discounters files Chapter 11 bankruptcy

For many companies in Salem and throughout the rest of the U.S., the difference between financial struggles and solvency can be just a little bit if bad press. Businesses, particularly retailers, rely on their reputations to bring customers through their doors. For many of those companies who’ve suffered from scandal, litigation, and other forms of bad publicity, their tarnished images ultimately lead them to bankruptcy court.

Despite protestations to contrary, the fallout from a federal investigation seems to have contributed to the rapid decline of a national U.S. retailer. Last year, USA Discounters Ltd. came under fire after a probe by the Consumer Financial Protection Bureau revealed that they had misled service members regarding the services they were receiving. The company offered consumer financing to servicemen and women to purchase the items that they themselves sold. With their financing packages, USA Discounters also asked customers to pay a $5 fee to determine if they were eligible for consumer protection through the Servicemembers Civil Relief Act. According the CFPB’s investigation report, the company was legally obligated to make such inquiries as a part of their service. It is also alleged that they never followed through on the providing the consumer protection service to those who did pay.

Since then, the company has seen its patronage plummet, to the point of where their struggling operations and mandated repayment of consumer protection fees has left them with little option but to consider bankruptcy. A recent announcement confirmed that the company has indeed filed for Chapter 11 bankruptcy protection.

For companies such as this that need protection from creditors as they cease their operations, bankruptcy may be an attractive option. Securing such protection may be easy with the help of an experienced bankruptcy attorney.

Source: The Wall Street Journal “USA Discounters Seeks Bankruptcy Protection” Jacqueline Palank, Aug. 25, 2015

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