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A Tennessee company has assumed ownership of U.S. Cavalry Store Inc. in Radcliff after the company filed Chapter 11 Bankruptcy to reorganize debt earlier this year.
ERMC Property Management Co., a privately owned facilities services company headquartered in Chattanooga, Tenn., took control July 23 of U.S. Cavalry, according to an emergency management agreement filed in U.S. Bankruptcy Court for the Western District of Kentucky. U.S. Calvalry is a retailer that equips military and law enforcement officials with boots, packs, uniforms and tactical gear.
Larry Dismukes, a business turnaround specialist who will help oversee management of U.S. Cavalry, said around 75 employees were retained once the sale was finalized.
“We hired everyone back the next day,” Dismukes said. “We put everyone on the payroll.”
The emergency management agreement states ERMC will receive all business income from the company after the date of the sale and is responsible for all operational expenses; payroll; payroll taxes; health insurance; and liability, fire and extended casualty and workers’ compensation insurance for the office and retail site, warehouse, distribution center and stores.
Dismukes said ERMC was interested in purchasing U.S. Cavalry because it complements another business it holds in the public safety sector that caters primarily to law enforcement. By adding a brand with a focus on military, it diversifies the company’s profile, he said.
“Once we mesh all the pieces together, we will have a (pool) of brands that compete against anyone in the public safety industry,” he said.
As it is, ERMC is one of, if not the, largest brick-and-mortar public safety retailers around, Dismukes said.
The purchase also gives ERMC access to e-commerce and distribution center capabilities it lacked while beefing up its infrastructure with more stores, warehouse space and IT functions, he said.
Beyond that, he said U.S. Cavalry is a well-known brand in the industry ERMC wanted to rehabilitate.
“This is a sad story,” he said.
In its bankruptcy petition, U.S. Cavalry’s assets were estimated at less than $50,000 with liabilities between $1 million and $10 million. Between 200 and 999 creditors were owed money by the company, according to the petition.
U.S. Bankruptcy Court Judge Alan C. Stout ruled ERMC could purchase U.S. Cavalry clear of all liens and claims against the company.
“ERMC shall have no liability or responsibility for any liability or other obligation of the debtor,” Stout stated in his ruling on the sale.
A case filed under Chapter 11 of the U.S. Bankruptcy code is frequently referred to as a “reorganization” bankruptcy for corporations. Often a debtor maintains possession of the business and control of its assets under the oversight of the court while reorganizing.
Dismukes said some of U.S. Cavalry’s assets likely will be liquidated because they were not purchased by ERMC. The organization also has started a trust that will pay a minimum of $500,000 over the first 24 months of the acquisition, Dismukes said. There is an opportunity for creditors to earn more toward the old debt if the business proves successful, he said.
ERMC took this approach, he said, because creditors are vendors ERMC wants to build a relationship with rather than alienate.
“We want them to have a vested interest in helping us be successful,” Dismukes said.
U.S. Cavalry first opened in 1973 on the south end of Radcliff on Dixie Boulevard, according to founder Randy Acton. The store moved several times over the years, staking locations on Wilson Road before settling in 1988 in its present spot on Centennial Avenue, he said. It also developed a significant mail-order business.
U.S. Cavalry operates the Radcliff retail store as well as stores at Fort Knox, Fort Campbell and Columbus, Ga., near Fort Benning, according to its website.