Conn's Inc. and its affiliates have filed their Second Amended Joint Plan of Distribution with the U.S. Bankruptcy Court for the Southern District of Texas, detailing how the 130-year-old retailer plans to liquidate its remaining assets and distribute proceeds to creditors after selling substantially all of its operations.
The disclosure statement, filed on June 11, 2025, outlines the proposed treatment of various creditor classes, with secured lenders expected to recover between 30% and 73% of their claims while general unsecured creditors are projected to receive approximately 1% of their $375 million in claims.
"The Plan contemplates a liquidation and distribution of the Debtors and their Estates and is therefore referred to as a 'plan of distribution,'" the filing states. "The primary objective of the Plan is to maximize the value of recoveries to holders of Allowed Claims and to distribute all property of the Debtors' Estates that is or becomes available for distribution in accordance with the Bankruptcy Code and Plan."
Conn's, which filed for Chapter 11 protection on July 23, 2024, operated 553 retail stores across the Southeast, Mid-Atlantic, and Southwest United States at the time of its bankruptcy filing, employing approximately 3,800 people. The company was founded in 1890 as a small heating and plumbing company in Texas and evolved into a major retailer of home furnishings, appliances, and electronics with a significant in-house credit business.
The proposed plan comes after Conn's completed several significant asset sales during the bankruptcy case, including the sale of consumer loan portfolios and other assets to Jefferson Capital Systems, LLC. That transaction was approved by the court on November 6, 2024, with an initial closing on December 3, 2024, and a second closing on January 15, 2025. The company has also completed numerous real estate and lease sales during the Chapter 11 proceedings.
Under the plan, three classes of creditors are entitled to vote: Class 4 (Prepetition 2L Secured Claims), Class 5 (Prepetition 3L Secured Claims), and Class 6 (General Unsecured Claims). The voting deadline is July 15, 2025, at 4:00 p.m. Central Time, with a confirmation hearing scheduled for July 21, 2025.
The plan proposes the creation of a Distribution Trust to hold and administer certain assets for the benefit of unsecured creditors. A Plan Administrator will be appointed to oversee the wind-down of the debtors' estates and make distributions to creditors according to their priority.
"On the Effective Date and following satisfaction of the Debtors' distribution and funding requirements set forth in the Plan, the Debtors shall be dissolved for all purposes unless the Plan Administrator determines that dissolution can have any adverse impact Wind-Down," the disclosure statement explains.
The disclosure statement also reveals the factors that led to Conn's bankruptcy filing, including "changes in consumer behavior" following the COVID-19 pandemic, costs associated with integrating its December 2023 merger with W.S. Badcock, macroeconomic pressures from inflation and rising interest rates, and operational challenges with underperforming store locations.
"The steady increase in interest rates and costs of capital, with minimal to no relief in the near term, detrimentally impacted the Company's ability to service its debt obligations," the disclosure statement notes. Interest rate expenses increased from $25.7 million in the year ended January 31, 2021, to approximately $81.7 million in the year ended January 31, 2024.
The plan also addresses a significant dispute with the Texas Comptroller of Public Accounts, which filed a claim for $24.5 million related to an audit of the debtors' use of bad debt credits to reduce their sales and use tax returns. Conn's disputes this claim and believes it is actually owed approximately $12 million in refunds from the Comptroller.
A settlement was also reached with an Ad Hoc Dealer Group regarding the payment of certain administrative expense claims associated with going-out-of-business sales at the retailer's locations.
The case is being heard by Judge Alfredo Rodriguez Pérez in the Southern District of Texas Bankruptcy Court (Case No. 24-33357). Conn's is represented by Sidley Austin LLP.
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