Conn's Inc., the once-prominent home appliance and furniture retailer, has filed its liquidation plan in bankruptcy court, outlining how it intends to distribute proceeds from asset sales and wind down its operations following its July 2024 bankruptcy filing. The plan, which offers unsecured creditors a projected recovery of just 1%, follows months of store closing sales and the sale of substantially all of the company's assets.
In documents filed on May 19, 2025, with the U.S. Bankruptcy Court for the Southern District of Texas, Conn's detailed its joint plan of distribution, which maps out how creditors will be paid from proceeds generated through various asset sales. The company, which operated 553 stores across the Southeast, Mid-Atlantic, and Southwest United States before its bankruptcy filing, has already completed the sale of its consumer receivables portfolio and other key assets to Jefferson Capital Systems, LLC.
"Each of the Debtors' board of directors, member, or manager, as applicable, has approved the transactions contemplated by the plan," the disclosure statement reads, adding that both the debtors and plan sponsor BRF Finance Co., LLC "strongly recommend that all holders of claims whose votes are being solicited submit ballots to accept the plan."
The plan classifies claims into ten categories, with varying projected recoveries. Holders of second-lien secured claims (Class 4), valued at approximately $101.5 million, can expect recoveries between 30% and 73%. Third-lien claims (Class 5) of approximately $50 million are projected to receive no recovery, while general unsecured creditors (Class 6), with claims totaling roughly $375 million, are expected to see just a 1% return.
The retailer's downfall came less than a year after its December 2023 acquisition of W.S. Badcock ("WSB"), which was intended as a strategic expansion. The disclosure statement cites several factors contributing to the bankruptcy filing, including "changes in consumer behavior" following the pandemic, costs of integrating the WSB merger, macroeconomic challenges, and operational difficulties.
"Although the COVID-19 pandemic saw a dramatic spike and 'pull-forward' in consumer expenditures with respect to home remodeling and decorating, the steady increase of inflationary pressures and interest rates following the pandemic has had a substantial impact on consumer discretionary spending—resulting in consumers delaying financing for discretionary purchases," the company explained.
Chief Restructuring Officer Mark Renzi signed the disclosure statement, which outlines the formation of a Distribution Trust to hold certain assets and make distributions to creditors. The plan also incorporates previously approved settlements, including a dealer settlement providing for bonus payments and an Assurant settlement for $1.5 million.
A key component of the plan is a series of releases for company executives and other parties. These include releases granted by the debtors as well as third-party releases that will apply to creditors who do not opt out by the July 11, 2025 deadline.
Judge Alfred H. Bennett will consider approval of the disclosure statement at a hearing scheduled for June 9, 2025. If approved, creditors will vote on the plan, with the confirmation hearing scheduled for July 18, 2025.
Conn's, founded in 1890 as a small heating and plumbing company that later expanded into appliance sales, had evolved into a national retailer with a significant e-commerce presence. The company's common stock, previously traded on Nasdaq under the symbol "CONN," was delisted shortly after the bankruptcy filing and now trades on the OTC market under "CONNQ."
The retailer's Chapter 11 filing came at a time when it had approximately $530 million in funded secured debt obligations. Since filing for bankruptcy, Conn's has conducted going-out-of-business sales at its retail locations and sold most of its assets through various transactions.
One notable unresolved issue is a $24.5 million claim filed by the Texas Comptroller of Public Accounts, which the company is contesting. Conn's also believes it is owed approximately $12 million in tax refunds from various states, which it hopes will help fund distributions under the plan.
The disclosure statement and plan were filed by Sidley Austin LLP, which serves as counsel to the debtors.
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