| Item 1.03. | Bankruptcy or Receivership |
On July 23, 2024, Conn’s, Inc. (“Conn’s”) and certain of its subsidiaries including Conn Appliances, Inc., Conn Credit Corporation, Inc., CAI Credit Insurance Agency, Inc., CAI Holding LLC, Conn Credit I, LP, New RTO, LLC, W.S. Badcock Credit I LLC, W.S. Badcock Credit LLC, W.S. Badcock LLC and Conn Lending, LLC (Conn’s, together with such subsidiaries, the “Company”), filed voluntary petitions for relief (the “Chapter 11 Cases”) under chapter 11 of title 11 of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”).
The Company will continue to operate their businesses as “debtors-in-possession” under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and the orders of the Bankruptcy Court.
| Item 2.03 | Creation of Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant |
On July 24, 2024, the Debtors entered into a senior secured superpriority, priming debtor-in-possession ABL credit facility (the “DIP Facility”), documented pursuant to that certain Amendment No. 5 to Fifth Amended and Restated Loan and Security Agreement, which was approved by the Bankruptcy Court on July 24, 2024. Under the DIP Facility, the Debtors have access to (x) a new money term loan in the aggregate principal amount of $5 million, which will be available immediately upon entry of an interim order approving the DIP Facility, and (y) non-cash loans in an aggregate amount equal to $20,000,000 through the relief provided with respect to the revised prepayment under Section 5.2.2 of the credit agreement approving the DIP Facility.
The foregoing description of the DIP Facility does not purport to be complete and is qualified in its entirety by reference to the credit agreement approving the DIP Facility filed as Exhibit 10.1 to this Current Report on Form 8-K and incorporated herein by reference.
| Item 2.04 | Triggering Events that Accelerate or Increase a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement |
The commencement of the Chapter 11 Cases constitute an event of default that accelerated the obligations under the following debt instruments (the “Debt Instruments”):
| | • | | $386.8 million in outstanding borrowings under the Fifth Amended and Restated Loan Agreement, dated March 29, 2021, by and among the Company, as parent and guarantor, Conn Appliances, Inc., Conn Credit I, LP and Conn Credit Corporation, Inc., as borrowers, certain banks and financial institutions named therein, as lenders, and JPMorgan Chase Bank, N.A., in its capacity as agent for lenders, as may be amended or supplemented from time to time; |
| | • | | $93.0 million in outstanding borrowings under the Term Loan and Security Agreement, dated as of December 18, 2023, among Conn’s, Inc., as parent and guarantor, Conn Appliances, Inc., Conn Credit I, LP, Conn Credit Corporation, Inc., and W.S. Badcock LLC, as borrowers, BRF Finance Co., LLC, as administrative agent and collateral agent, and the financial institutions party thereto, as lenders, as may be amended or supplemented from time to time; and |
| | • | | $50.0 million in outstanding borrowings under the Delayed Draw Term Loan and Security Agreement, dated as of July 31, 2023, among Conn’s Inc., as parent and guarantor, Conn Appliances, Inc., Conn Credit I, LP and Conn Credit Corporation, Inc., as borrowers, certain financial institutions, as lenders, and Stephens Investments Holdings LLC, as administrative agent, as may be amended or supplemented from time to time. |
Any efforts to enforce payment obligations under the Debt Instruments are automatically stayed as a result of the Chapter 11 Cases and the creditors’ rights of enforcement in respect of the Debt Instruments are subject to the applicable provisions of the Bankruptcy Code.
