Personal-injury plaintiffs in the Chapter 11 wind-down of 99 Cents Only Stores, LLC say they are getting the company’s last markdown, but this time the bargain comes at their expense. Once a nationwide discount chain with hundreds of stores, 99 Cents is now in the final stages of liquidation in the U.S.
Bankruptcy Court for the District of Delaware (Case No. 24-10721 (JKS)). The case, overseen by Judge J. Kate Stickles, is operating under a liquidation plan she approved that recognizes injury claims on paper, but leaves plaintiffs’ actual payouts to a court-created trust where, plaintiffs say, they have been told to expect pennies on the dollar, if anything, after a long delay.
At the center of the dispute is Judge Stickles’s use of her authority under 11 U.S.C. §502(c) to estimate, or “fix,” personal-injury claims for bankruptcy purposes. The estimation process assigned dollar values to claims to move the case forward without full trials. For many claimants, the judge-fixed amount was tied to the company’s $300,000 self-insured retention (SIR), a figure that appeared to place a concrete value on each injury claim.
From Court Orders to Pennies on the Dollar
Plaintiffs’ attorneys say that valuation largely exists only on paper. Under the plan Judge Stickles approved, court-estimated injury claims are classified as general unsecured claims, grouped with ordinary unsecured obligations. Payments are made from a liquidation trust on a pro rata basis after expenses. In practical terms, plaintiffs say they have been told to expect a claim fixed at $300,000 to translate into a recovery of one to three percent, if anything at all, and only after a lengthy wait. Recognition becomes dilution, and resolution becomes delay.
A Deliberate Choice That Benefited the Trust
Critics argue this outcome reflects a deliberate exercise of judicial discretion rather than an unavoidable consequence of bankruptcy law. While Judge Stickles’s estimation orders assigned dollar figures to injury claims, the structure she approved left their real-world impact to the trust’s distribution mechanics, widening the gap between what claims appear to be worth in court orders and what injured plaintiffs may actually receive.
Bankruptcy practitioners familiar with mass-tort cases say the outcome here was not routine. Courts often estimate injury claims, they note, but judges also have discretion to create separate classes, require reserves, or structure capped but meaningful recoveries. Plaintiffs argue none of those options were adopted in the 99 Cents case, and that the plan Judge Stickles approved instead channeled court-estimated injury claims into the general unsecured pool, a choice that predictably favored the liquidation trust’s economics over recoveries for the injured.
‘Insurance-Only or Take Pennies’
The plan also compels personal-injury claimants to make a stark choice. They may remain in the trust and accept whatever fractional recovery eventually materializes, or they may seek permission from Judge Stickles to pursue insurance-only recoveries, which requires waiving any claim against the trust. Plaintiffs say the economics of the plan effectively steer them toward the insurance route, not by choice, but by necessity.
Plaintiffs Describe Abrasive, Dismissive Communications
Plaintiffs say communications from Pachulski Stang Ziehl & Jones LLP, counsel to the debtor and trust, conveyed that injury claims would be treated as unsecured paper entries, in exchanges they describe as dismissive and needlessly abrasive, reinforcing their belief that the process is structured to wear claimants down and push them toward minimal recoveries.
Administration of the contentious bankruptcy has involved Pachulski Stang Ziehl & Jones LLP, alongside Delaware counsel Young Conaway Stargatt & Taylor, LLP, with Kroll Restructuring Administration maintaining the public docket and claims platform.
For injured plaintiffs, the concern extends beyond a single discount retailer’s collapse. When a bankruptcy judge fixes injury claims at six figures but approves a structure that reduces those claims to unsecured paper entries with minimal payout value, the takeaway is stark. In the end, the deepest discount in the 99 Cents liquidation may not be on merchandise, but on the value of injury claims once they move from the courtroom to the trust ledger.
