Dirt Cheap’s parent company, Channel Control Merchants, and 18 affiliated debtors filed for chapter 11 bankruptcy and announced the anticipated closure of 68 locations across eight states on Oct. 10. Attempts to reach CCM were unsuccessful and when asked if there was an anticipated closing date, a member of Hattiesburg’s Dirt Cheap management team declined to comment.
Hudson Salvage was founded by Senator Billy Hudson in 1954 with the goal of keeping unsold merchandise out of landfills. After selling his interest in the company to his son, Bill Hudson Jr., and CCM, the company grew over the last 30 years to as many as 100 locations nationwide at its peak. Hudson Jr. sold the last of his interest in the company in 2010.
According to the bankruptcy paperwork filed in Delaware, liabilities owed fell between $100 million to $500 million to between 200 and 999 creditors. According to Jeffery Martin, who was named the chief restructuring officer back in September, there were multiple issues with their primary supplier, Target.
"Over the past 18 months, Target has de-mixed its pallets, divesting its best returns to B-Stock Solutions Inc., a company competitor,” Martin said, “Target has been channeling a deteriorating mix of inventory to the debtors, while increasing the cost of its pallets. Given Target’s position as the company’s foundational supplier, the company lacked the necessary leverage to negotiate or otherwise dispute these increased costs."
To summarize, Target was allegedly selling the best of the overstock inventory to competitors at a lower price while charging more to Dirt Cheap for lower quality goods. As the top supplier and creditor, debt to Target climbed to $15.6 million followed by Amazon at $5.5 million. The final hearing will be held Nov. 7.
