U.S. Outdoor Store, a landmark store in downtown Portland for decades, filed for bankruptcy and closed its downtown store. The retailer blamed fallout from COVID-19, civic unrest in Portland, shifts to online purchasing and a dispute with its lender.
Owner Ed Ariniello, whose family purchased U.S. Outdoor Store in 2017, said in a court filing, “The COVID-19 pandemic, social unrest in Downtown Portland, and the dramatic customer move to online retail from brick-and-mortar stores has rendered the debtor’s previous business model untenable. Leasing a large retail space in Downtown Portland became impossible to justify, and the debtor’s recent move attempts to find a more sustainable operation.”
As the Oregonian reported, U.S. Outdoor Holdings LLC’s filing “indicates the business had substantial debts, to prominent clothing and equipment companies and to the store’s prior owners, and was losing money before the pandemic and protests.”
Ariniello told the Oregonian, conditions in downtown related to protests and an increase in homeless residents around the Southwest Broadway area significantly impacted operations. He told the newspaper, “My customers tell me they’re tired of tripping over bodies to get to the store.”
The Oregonian reported that U.S. Outdoor opened a new Pearl District location earlier this month as it closed the downtown location.
According to the affidavit filed in Portland’s bankruptcy court, Ariniello said the bankruptcy filing had also been precipitated due to actions by its secured lender, U.S. Outdoor Store, Inc., which has a significant claim related to the sale of the business to current ownership.
Ariniello bought the operation three years ago from the Solomon family, which owned the retailer for 60 years. Ariniello said the lender “failed to properly perfect its security interest in the debtor’s assets, and debtor’s position is that lender’s security interest is avoidable in bankruptcy and lender’s claim would then be treated as wholly unsecured.”
Ariniello also claims the lender is also affiliated with the retailer’s now-former landlord with the lease “above-market rate and comprised a location and space that were incompatible with the debtor’s needs and financial situation.”
The company intends to reject that lease for the downtown store and assume the lease for its new location. Ariniello wrote, “By seeking a breathing spell in bankruptcy, debtor will be able to shift focus to operating in a manner that is cash flow positive and continuing a marketing process for the growth and possible sale of the debtor’s assets and operations as a going concern.”
The filing listed assets between $100,000 and $500,00 and liabilities between $1 million and $10 million.
Among vendors on the top-20 unsecured list, Amer Sports was owed $100,463.28; The North Face Outdoor, $91,892.16; Volcom, $82,470.63; Arcteryx, $54,401.76; Dakine, $46,744.87; C3 Worldwide, $43,565.52; K2 Sports, $43,466.96; Rossignol USA, $41,856.88; Luxottica of America, $38,431.51; Vans, $36,420.74; Marker Volkl US, $35,063.92; Smith Sport Optics, $27,706.16; Sole Technology, $24,888.43; Airblaster, $23,174.34; and Nitro Snowboards & L1 Outerwear, $22,082.52.
The largest creditor is Solomon Management, owed $2.1 million. The nature of the claim is listed as “Unperfected lien – Judgment.”
The bankruptcy filing comes just months after U.S. Outdoor Holdings borrowed $266,067 from the federal government as part of its PPP loan program and the loan in listed on the unsecured claims list. The unsecured list also includes three credit card claims: American Express, $54,867.51; US Bank Credit Card , $28,237.50; and Capital One – Spark Card, $26,847.65.
Photo courtesy U.S. Outdoor Store
