Conn's: Store Closings and $360M 363 Sale Drive Chapter 11 Restructuring

Conn’s entered chapter 11 in the Southern District of Texas in July 2024 with a familiar late-cycle retail problem set—softer demand for big-ticket home goods, inflation- and rate-driven margin and interest expense pressure, and a cost base built for a larger store fleet—layered on top of a less familiar complication: a scaled in-house credit segment whose receivables became the core monetization path in bankruptcy. News coverage framed the filing as a rapid pivot from store rationalization to an all-out liquidation and sale process as the company sought court protection and began winding down its retail footprint.

In practice, the case became a financing-and-sale-driven wind-down. Early filings describe a capital structure split across an ABL revolver, junior secured layers, and substantial trade payables, while the postpetition liquidity package combined a modest new-money component with covenant-driven borrowing-base flexibility and roll-up mechanics. The endgame was a section 363 transaction with Jefferson Capital Systems centered on consumer receivable portfolios—consistent with Jefferson’s own description of acquiring “performing and non-performing portfolios” and not retail operations—followed by a plan process that confirmed a wind-down + distribution trust framework in summer 2025. The arc from petition to plan effective date illustrates how a retail debtor’s “going-out-of-business” operations, credit receivables, and intercreditor dynamics can converge into a single restructuring thesis: monetize receivables and liquidate inventory, then distribute residual value through a trust.

363 Sale and Plan Confirmation

The business Conn’s brought into chapter 11 (and why “credit” mattered). Conn’s described itself in bankruptcy filings as operating two connected segments: a retail segment selling home furnishings, mattresses, appliances, and consumer electronics through stores and e-commerce, and a credit segment that originated and serviced in-house consumer loans used to finance a meaningful portion of retail sales (first day declaration). That combination shaped the bankruptcy in three ways that are easy to miss if you only focus on store-count headlines. First, the receivables portfolio was not just a byproduct of retail sales—it was an asset class with its own financing structures, servicing requirements, and monetization options. Second, it influenced collateral packages and intercreditor leverage: a retailer’s “inventory and receivables” are typical ABL collateral, but Conn’s also had layers of junior secured debt and credit-related assets that became central to sale mechanics. Third, it affected what an eventual buyer would rationally want. A debt-collection and portfolio investor like Jefferson Capital is structurally positioned to buy consumer receivable portfolios and run collections, even if it has no interest in continuing retail origination—consistent with Jefferson’s statement that the transaction did not include retail operations and that it would not originate new loans (Jefferson press release).

Pre-filing expansion and integration risk: the Badcock transaction backdrop. Conn’s entered 2024 only months removed from its Badcock combination. In December 2023, Conn’s announced a “transformative” transaction involving W.S. Badcock that it said would create one of the largest home goods retailers in the U.S., with 550+ stores across 15 states and approximately $1.85 billion of combined revenue (GlobeNewswire transaction announcement). Postpetition filings and industry reporting describe integration friction—systems, compensation, and operational differences—arriving at the same time that macro conditions turned adverse for financed big-ticket purchases, a combination that can be destabilizing when the balance sheet is already levered (first day declaration; Home News Now deep dive).

Stated drivers of distress: demand, inflation, rates, and fixed costs. Management’s first day narrative pointed to the post-stimulus demand reset and broader shifts in consumer spending, while also emphasizing cost pressure from inflation and the compounding effect of higher interest rates on a debt stack that was expensive to carry (first day declaration). Reporters similarly described the filing as following sales declines and a difficult environment for home goods retailers (Bloomberg report; CoStar coverage). The important restructuring-professional takeaway is not just “consumer weak”; it is the timing mismatch between (i) fixed lease and labor obligations across a wide store footprint and (ii) discretionary demand for financed home-goods baskets, which becomes more rate-sensitive as credit becomes more expensive to originate and more expensive to carry on the company’s own balance sheet.

The capital structure at filing: layered secured debt and a heavy trade overhang. Bankruptcy filings described approximately $529.8 million of funded debt at the petition date, split among a first lien ABL revolving facility, a second lien term loan, and a third lien delayed draw term loan, plus an estimated $200 million of trade and other general unsecured obligations (first day declaration). A simplified snapshot of the funded debt stack described in the first day materials is below.

Liquidity strategy: a “small new-money” DIP paired with borrowing-base flexibility and roll-up mechanics. Conn’s postpetition financing strategy is best understood as a package rather than a single dollar figure. The amended DIP motion described: (i) $5 million of new-money DIP term loans, (ii) $20 million of “non-cash” incremental availability achieved by modifying an ABL covenant to require a minimum $80 million availability level, and (iii) a “creeping” roll-up framework that effectively refinanced prepetition ABL exposure over time as cash was used for postpetition expenditures (amended DIP motion). The pricing summary in the DIP motion described interest at base rate plus 4.75% (amended DIP motion).

This structure makes sense for a retailer rapidly shrinking its footprint. If the plan is to liquidate inventory and monetize receivables, the debtor often needs just enough incremental liquidity to fund an orderly wind-down, meet payroll and critical operational costs, and pay the third parties who physically execute liquidation and sale processes. In Conn’s case, the liquidity framework also hardwired milestones that tied financing to the cadence of store closing and sale execution—turning liquidity into a governance mechanism.

Milestones and timing pressure: why early-case dates were central. The DIP motion’s milestones contemplated an aggressive early timetable, including early orders to support going-out-of-business activities and bidding procedures, with a stated goal of completing all GOB sales by October 31, 2024 (amended DIP motion). The final DIP/cash collateral order also contained the familiar carve-out framework setting caps for postpetition professional fees and committee professional fees, a key allocation issue in cases where liquidating value is finite (final DIP order).

What changed later: the DIP amendment that extended maturity and shifted milestones to an “ABS receivables sale.” In December 2024—after the sale order was entered and around the time the Jefferson transaction closed—Conn’s filed a notice of amendment (Amendment No. 6) to the DIP credit agreement that extended the DIP stated maturity construct to the later of (a) 90 days after the petition date and (b) February 28, 2025 (DIP amendment notice). The amendment also introduced a revised milestone set tied to an “ABS receivables sale” process, including indications/letters of intent by December 13, 2024, stalking horse identification by the week of December 30, 2024, a bid deadline by January 24, 2025, an auction by January 30, 2025, and completion of the ABS receivables sale by February 14, 2025—paired with an event-of-default consequence for missing milestones (DIP amendment notice).

For restructuring professionals, this is a subtle but important timeline signal: the financing structure evolved from “sell and liquidate quickly” to “keep the machine running long enough to complete receivables monetization,” which can require additional time to run a marketing process, clear consents, transition servicing, and finalize documentation.

Store closing and liquidation execution: the operational overlay. Public communications around the filing quickly shifted to store closing and liquidation. B. Riley Retail Solutions announced store closing sales beginning July 25, 2024 with initial discounts of 30%–50% across more than 550 locations, with “all sales final” terms and a broad multi-state footprint (B. Riley liquidation announcement). Consumer-facing coverage also tracked closures and locations affected (Good Housekeeping store list; CNN coverage). These sources are not a substitute for court filings on lease rejections or store-by-store outcomes, but they are useful for conveying the practical reality: once a retailer enters a broad liquidation posture, the liquidation manager’s cadence and terms shape inventory realization and consumer behavior in a way that can be more immediate than any plan term.

Bidding procedures: the sale process calendar that set the case’s rhythm. The court-approved bidding procedures order established a structured calendar for bids, auction, objections, and a sale hearing, creating a defined window in which stakeholders could evaluate competing proposals and litigate issues like assumed contracts and cure costs (bidding procedures order). Key milestones included a September 6, 2024 bid deadline, a September 11, 2024 auction date, and a sale hearing scheduled for October 1, 2024 (subject to court availability) (bidding procedures order). Even though the sale order was ultimately entered in November, the procedure order’s timeline matters because it reflects what the parties expected the case to look like at the time: a rapid marketing process with limited runway for alternative strategies.

Stalking horse economics: a $360 million framework with collections-and-servicing mechanics. A stalking horse designation notice identified Jefferson Capital Systems, LLC as stalking horse and summarized a purchase price framework starting at $360 million, with adjustments tied to interim period collections and an interim servicing fee concept, alongside bid protections including a $10.8 million break-up fee and up to $1.25 million in expense reimbursement (stalking horse designation notice). That purchase-price structure is directionally consistent with a receivables-heavy deal: the economic heart of the transaction is not simply “cash at closing” but a set of adjustments and payoff mechanics connected to the value of receivables collections and financing paydowns.

Industry reporting also captured the headline value proposition—Conn’s seeking approval for a ~$360 million bid from a debt collector—while emphasizing that the sale was focused on credit receivables portfolios (Law360 coverage). In drafting a restructuring narrative, the professional-grade approach is to treat “$360 million” as the framework described in court filings and to separately note when press releases frame the transaction as an “investment” number that may reflect broader economics rather than the purchase price mechanics in the asset purchase agreement.

The sale order: court findings, free-and-clear authority, and what it does (not) quantify. The sale order identified Jefferson as the successful bidder/purchaser and included customary section 363 findings, including good-faith purchaser findings and authority to sell assets free and clear subject to the order’s terms (sale order). For analysis, it is important to recognize what a sale order often does not do: it may not restate a single simple price, particularly where the “purchase price” is a defined term in an asset purchase agreement incorporating adjustments, credits, and payoff mechanics. That is not a defect; it is a feature of how receivables transactions are documented. But it does mean that professionals reading the docket should tie public “price” descriptions back to the governing agreement and its adjustment mechanisms when assessing stakeholder recoveries.

Closing mechanics: confirmation that the Jefferson sale transaction closed in December 2024. Conn’s filed a notice confirming the sale transaction with Jefferson closed on December 3, 2024, in accordance with the amended and restated stalking horse asset purchase agreement and the sale order (closing notice). Jefferson later stated it completed the purchase of performing and non-performing portfolios and described welcoming more than 200 associates to a new collections office in San Antonio, while emphasizing the transaction did not include retail operations or origination (Jefferson press release).

This pairing—the court-side closing notice and the buyer-side business description—is one of the cleaner ways to explain what “sold” in a consumer-finance-adjacent retail bankruptcy without drifting into speculation about residual retail operations. It also helps reconcile why some consumer-facing articles focus on store closures while the core value transaction is described in terms of receivable portfolios.

Creditor dynamics: committee challenge rights and lien-scope disputes. A committee standing motion described a negotiated challenge-deadline framework and framed disputes about lien perfection and lien scope, including allegations that certain assets may have been unencumbered and disputes over charges and fees under section 506(b) and adequate protection calculations (committee standing motion). In a case where the primary sale assets are receivables and related rights, lien scope and perfection disputes are not academic—they are waterfall determinative. A creditor body that believes some value is unencumbered can rationally push for standing, both to increase negotiating leverage and to preserve optionality for litigation if the economics do not resolve consensually.

Plan confirmation: wind-down debtors, a distribution trust, and a class structure that channels residual value to unsecured creditors through trust interests. The plan confirmed in July 2025 used a two-track implementation structure: assets vest in wind-down debtors administered by a plan administrator, while a distribution trust is created for the benefit of holders of allowed general unsecured claims, governed by a distribution trust agreement (plan; confirmation order). The plan sponsor was BRF Finance Co., LLC, and the plan defined Epiq Corporate Restructuring, LLC as the notice and claims agent (plan; confirmation order).

The plan’s class structure is a useful “map” of how this liquidation-and-sale case was intended to resolve stakeholder claims. The first lien ABL class was treated as unimpaired and paid in full in cash, while the second lien and third lien classes were impaired and entitled to vote, with recoveries tied to distributable cash subject to intercreditor arrangements. General unsecured creditors (including any third lien deficiency) were impaired and received distribution trust interests—meaning their recovery was structurally linked to whatever distributable cash and causes of action ultimately flowed into the trust, rather than a fixed cash distribution at confirmation (plan).

Releases and opt-outs: the confirmation order’s treatment of third-party releases. The confirmation order approved debtor releases and a consensual third-party release structure with opt-out mechanics, and described the third-party release as a negotiated component of plan support (confirmation order). The order’s discussion noted that holders had a mechanism to opt out and that the debtors received more than 100 opt-out elections, which is a useful signal about creditor behavior in a liquidation plan where third-party release provisions can be contentious (confirmation order). The order also approved exculpation for exculpated parties (subject to standard carve-outs) and imposed an injunction framework to prevent actions inconsistent with the plan’s release and implementation provisions (confirmation order).

Timeline synthesis: from Badcock deal to plan effective date. Conn’s chapter 11 timeline makes more sense when anchored around the economic “moments” rather than the docket alone: the Badcock combination expanded footprint and integration complexity; the petition date marked the pivot into liquidation; the bidding procedures order set an accelerated marketing window; the sale order and closing completed the core receivables monetization transaction; and the plan later confirmed and became effective to govern residual distributions and wind-down governance. The table below consolidates those inflection points with primary and secondary sources.

What this case offers as a restructuring “pattern.” Conn’s is a useful reference case for professionals dealing with retailers that have meaningful captive finance or receivables programs. The case highlights that (i) a retailer can file chapter 11 with a store-closing narrative while still monetizing value primarily through receivables; (ii) DIP structures can blend small new-money tranches with borrowing-base flexibility and roll-ups, using milestones as governance; and (iii) liquidation plans can still involve complex intercreditor and lien-scope disputes where the collateral is not just “inventory,” but also credit-related rights and causes of action that will ultimately be administered through a wind-down and trust structure. For practitioners, the discipline is to keep the “economic asset” in focus: when receivables are the center of gravity, the sale process and milestones will look different than a pure inventory liquidation even if the consumer-facing story appears similar.

Frequently Asked Questions

When did Conn’s file for chapter 11 and where was the case pending?

Conn’s filed chapter 11 petitions on July 23, 2024 in the U.S. Bankruptcy Court for the Southern District of Texas (Houston) (Retail Dive report; first day declaration).

What was Conn’s business model, and why did the credit segment matter in the restructuring?

Bankruptcy filings described a two-segment model: a retail segment selling home goods and consumer electronics, and a credit segment that originated and serviced in-house consumer financing (first day declaration). That credit segment mattered because the consumer receivable portfolios and related rights became central to the section 363 transaction and later wind-down economics, as reflected in the stalking horse framework and buyer disclosures (stalking horse designation notice; Jefferson press release).

How many stores and employees did Conn’s and Badcock have at filing, and why do different counts appear in reporting?

At filing, Conn’s reported approximately 3,800 employees and described a footprint of 553+ corporate and dealer stores across 15 states, including both Conn’s and Badcock locations (first day declaration; Retail Dive report). Some consumer-facing articles separately reported store closures affecting the Conn’s-branded retail store base (for example, reporting that all 174 Conn’s locations would close), which can differ from the broader combined store footprint described in filings (CNN coverage).

What role did the Badcock transaction play in the chapter 11 narrative?

Conn’s announced a major Badcock transaction in December 2023 that it said would create a combined home goods retailer with 550+ stores and approximately $1.85 billion of revenue (GlobeNewswire announcement). Both bankruptcy filings and industry reporting later described integration friction and timing issues as macro conditions weakened for financed home goods purchases (first day declaration; Home News Now reporting).

How much funded debt did Conn’s report at filing, and how was it layered?

Conn’s described approximately $529.8 million of funded debt as of the petition date, including a first lien ABL revolver of roughly $386.8 million, a second lien term loan of roughly $93.0 million, and a third lien delayed draw facility of $50.0 million, plus significant trade and other unsecured obligations (first day declaration).

What was the DIP/cash collateral package and why was “$5 million new money” only part of it?

The amended DIP motion described a liquidity package that included $5 million of new-money DIP term loans, $20 million of incremental ABL availability achieved via covenant modification, and creeping roll-up mechanics that refinanced prepetition ABL exposure over time (amended DIP motion). In other words, the debtor’s liquidity strategy relied not only on incremental cash but also on structural changes to borrowing capacity and priority.

What was the stalking horse deal with Jefferson Capital Systems and what bid protections were described?

Court filings described Jefferson Capital Systems, LLC as stalking horse for a transaction framework starting at $360 million and including purchase price adjustments tied to interim collections and servicing mechanics, with bid protections including a $10.8 million break-up fee and up to $1.25 million of expense reimbursement (stalking horse designation notice). News coverage similarly described Conn’s seeking approval of a ~$360 million bid from a debt collector focused on receivables portfolios (Law360 coverage).

When did the Jefferson sale close and what did Jefferson say it acquired?

Conn’s filed a notice reporting that the sale transaction with Jefferson closed on December 3, 2024 (closing notice). Jefferson later described acquiring “performing and non-performing portfolios” from Conn’s and Badcock, welcomed more than 200 associates to a new collections office in San Antonio, and stated the transaction did not include retail operations or origination (Jefferson press release).

When was Conn’s chapter 11 plan confirmed and what was the basic plan structure?

The bankruptcy court entered an order approving the disclosure statement and confirming the third amended plan on July 21, 2025, and the plan effective date occurred on July 31, 2025 (confirmation order; effective date notice). The plan implemented a wind-down structure administered by a plan administrator and created a distribution trust for holders of allowed general unsecured claims, with general unsecured creditors receiving distribution trust interests (plan).

Who is the claims agent for Conn’s?

Epiq Corporate Restructuring, LLC serves as the claims and noticing agent. The firm maintains the official claims register and distributes case notifications to creditors and parties in interest (plan; confirmation order).

Read more bankruptcy case research on the ElevenFlo blog.