Bankrupt retailer Conn's, Inc. has filed an emergency motion seeking court approval to pay certain critical vendors 30 cents on the dollar as part of ongoing efforts to wind down its operations. The proposal, filed Monday in U.S. Bankruptcy Court for the Southern District of Texas, would establish "Accelerated Payment Procedures" for vendors who supplied goods within the 20 days before the company's July 2024 bankruptcy filing.
Conn's, once a leading retailer of furniture, appliances, and electronics with over 550 stores across 15 states, explained that the accelerated payment plan is "a necessary step" in attempts to reach a global resolution in coordination with its primary lender, BRF Finance Co., LLC, and the Official Committee of Unsecured Creditors.
"Absent approval of the Accelerated Payment Procedures, the Debtors do not have approval from their lenders to make any distributions on account of such 503(b)(9) Claims and cannot guarantee any payment to holders of 503(b)(9) Claims," the company stated in the motion. "Nor can the Debtors state with any assurance that they will be able to propose and confirm a plan of liquidation."
According to the filing, Conn's has identified 44 vendors holding priority administrative expense claims under section 503(b)(9) of the Bankruptcy Code, with claims totaling approximately $4.99 million. These claims represent goods received by Conn's in the ordinary course of business within the 20 days before its bankruptcy filing.
The proposed settlement would offer these vendors an immediate payment of 30% of their allowed claims if they agree to opt in to the program by May 15, 2025. Payments would be made within 10 days of a vendor's decision to participate. In exchange, participating vendors would waive any further right to recovery in the bankruptcy cases.
"The Accelerated Payment Procedures set forth streamlined procedures for the payment of the 503(b)(9) Claims and establish a fair and equitable manner for 503(b)(9) Claimants to receive payment on their administrative claims without incurring the additional expense of hiring counsel and/or filing and prosecuting litigation before this Court," the company argued.
At its peak before bankruptcy, Conn's employed approximately 3,800 full-time and 150 part-time employees across its retail network of 553 stores and 22 distribution and service facilities in 15 states. The company offered a broad selection of furniture, mattresses, home appliances, consumer electronics, and home office products, along with proprietary credit solutions for its core consumers.
The motion represents a significant development in Conn's bankruptcy proceedings, signaling that the company may be struggling to assemble sufficient resources to pay administrative claims in full, which is typically required for confirmation of a Chapter 11 plan.
A hearing on the emergency motion is scheduled for April 15, 2025, at 10:00 a.m. before Judge Pérez. The case is being heard in the Houston Division of the Southern District of Texas Bankruptcy Court, case number 24-33357, with Sidley Austin LLP representing the debtors.
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