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A Radcliff-based company in its 40th year of business has fallen on hard financial times but is re-structuring debt to prepare for an impending sale.
U.S. Cavalry Store Inc., a retailer that equips military and law enforcement officials with boots, packs, uniforms and tactical gear, has filed a Chapter 11 bankruptcy claim in U.S. Bankruptcy Court for the Western District of Kentucky.
The company’s attorney, Henderson-based Sandra D. Freeburger, submitted a notice of the case filed under Chapter 11 of the U.S. Bankruptcy Code on March 28. U.S. Cavalry also filed a voluntary petition late last month, which estimates money will be available for distribution to unsecured creditors.
In the bankruptcy petition, the company estimated its assets at less than $50,000 with liabilities between $1 million and $10 million. Between 200 and 999 creditors are owed money by U.S. Cavalry, according to the petition.
James Leonard, the company’s president, said U.S. Cavalry Store has been approached by ERMC Property Management, which intends to purchase the operating assets out of Chapter 11. ERMC’s interest in buying the company, Leonard said, will protect the future viability of U.S. Cavalry and the jobs of its roughly 96 employees. The bankruptcy reorganization is part of the purchasing process, he added. ERMC plans to keep the company name and maintain its headquarters in Radcliff, he said.
Leonard said the company’s customer service department has been informing customers of changes when they call and letters were distributed to all creditors.
The bankruptcy petition filed by U.S. Cavalry includes the 20 largest unsecured claims, which entails a mortgage loan of $1.87 million owed to Fifth Third Bank of Cincinnati for property at 1 U.S. Cavalry Way in Radcliff. Smaller mortgage loans of $372,044.01 and $302,999.02 also are owed to Fifth Third Bank of Cincinnati for property on Conestoga Parkway in Shepherdsville and Ky. 683 in Stearns respectively, according to the petition.
The remaining unsecured claims represent trade debt owed to various companies in several states, including California, Illinois, Minnesota, Missouri and Pennsylvania.
A list of creditors in court records indicate U.S. Cavalry also owes money to several local companies, such as ACS Air Compressor Service of Elizabethtown, Air Temp of Radcliff, Blossoms and Heirlooms of Vine Grove, Elizabethtown Overhead Garage, E-town Exterminating, Hampton Inn & Suites of Radcliff, Kerr Office Group of Elizabethtown and Nolin RECC. The amounts owed were not specified.
The company submitted an order April 4 asking for the authority to use up to $150,000 in cash collateral from Wells Fargo Bank as cash flow for business operations until Tuesday. The order, signed by U.S. Bankruptcy Judge Alan Stout, requires U.S. Cavalry to provide detailed financial reports daily to Wells Fargo Business Credit and Fifth Third Bank.
Wells Fargo and Fifth Third Bank are both listed as creditors with secured claims of $1.3 million, which is the amount of the two claims combined without deducting the value of collateral toward a promissory note on the property at Centennial Avenue and inventory and receivables.
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 under Chapter 11, which can take months or years depending on the size of the corporation and the complexity of the case, according to the court.
During a case, a debtor generally must submit a reorganization plan and written disclosure state-ment, which details assets, liabilities and business affairs of the debtor in a manner sufficient for a creditor to make a sound judgment on the reorganization plan, according to the court.
The reorganization plan must classify claims and indicate how each claim will be treated, according to the court.
“Creditors whose claims are ‘impaired,’ i.e., those whose contractual rights are to be modified or who will be paid less than the full value of their claims under the plan, vote on the plan by ballot,” the court states on its website.
Leonard said the company has not yet filed a reorganization plan but had its first hearing last week, which he described as productive.
Randy Acton, a local Realtor and founder of U.S. Cavalry, said he opened the first U.S. Cavalry retail store in 1973 on the south end of Radcliff along Dixie Boulevard. The store would move several times over the years, staking locations on Wilson Road before settling in its location on Centennial Avenue in 1988, he said. It also developed a significant mail order business.
Acton, who sold his interest in the company in 2004, said U.S. Cavalry also operated stores in Mall St. Matthews near Louisville and locations on or near Fort Campbell; Fort Bragg, N.C.; and Fort Hood, Texas. while he operated the business.
The company lists the Radcliff retail store as well as stores at Fort Knox; Fort Campbell; Fort Stewart, Ga.; and Columbus, Ga., near Fort Benning on its official website.
Acton said he was saddened by the news of the bankruptcy filing and described himself as one of the company’s biggest cheerleaders. He said he hopes a group of investors will step up and buy the company or help turn it around because he believes it offers a needed service for the community.
“I want to see the business succeed,” he said.
Leonard said the company is attempting to “fast track” the bankruptcy process and finalize the purchase so U.S. Cavalry can return to solvency and grow.
“This is our 40th year and we (fully intend) to continue business for the next 40 years,” he said.
Marty Finley can be reached at (270) 505-1762 or firstname.lastname@example.org.