Variable Interest Entity

6 Months Ended

Jul. 31, 2020

Organization, Consolidation and Presentation of Financial Statements [Abstract]

From time to time, we securitize customer accounts receivables by transferring the receivables to various bankruptcy-remote VIEs. Under the terms of the respective securitization transactions, all cash collections and other cash proceeds of the customer receivables go first to the servicer and the holders of the asset-backed notes, and then to the residual equity holder. We retain the servicing of the securitized portfolio and receive a monthly fee of 4.75% (annualized) based on the outstanding balance of the securitized receivables, and we currently hold all of the residual equity. In addition, we, rather than the VIEs, will retain certain credit insurance income together with certain recoveries related to credit insurance and RSAs on charge-offs of the securitized receivables, which will continue to be reflected as a reduction of net charge-offs on a consolidated basis for as long as we consolidate the VIEs.

We consolidate VIEs when we determine that we are the primary beneficiary of these VIEs, we have the power to direct the activities that most significantly impact the performance of the VIEs and our obligation to absorb losses and the right to receive residual returns are significant.

The following table presents the assets and liabilities held by the VIEs (for legal purposes, the assets and liabilities of the VIEs will remain distinct from Conn’s, Inc.):


(in thousands)	July 31, 2020		January 31, 2020
Assets:
Restricted cash	$	61,901	$	73,214
Due from Conn’s, Inc., net	5,542		307
Customer accounts receivable:
Customer accounts receivable	442,248		838,210
Restructured accounts	151,039		147,971
Allowance for uncollectible accounts	(173,872)		(151,263)
Allowance for no-interest option credit programs	(2,701)		(12,445)
Deferred fees and origination costs	(4,326)		(8,255)
Total customer accounts receivable, net	412,388		814,218
Total assets	$	479,831	$	887,739
Liabilities:
Accrued expenses	$	3,441	$	5,517
Other liabilities	7,584		7,584

Long-term debt:
2017-B Class C Notes	16,168		59,655
2018-A Class A Notes	12,203		34,112
2018-A Class B Notes	7,359		20,572
2018-A Class C Notes	7,359		20,572
2019-A Class A Notes	36,151		76,241
2019-A Class B Notes	46,427		64,750
2019-A Class C Notes	44,821		62,510
2019-B Class A Notes	118,509		265,810
2019-B Class B Notes	85,540		85,540
2019-B Class C Notes	83,270		83,270
	457,807		773,032
Less: deferred debt issuance costs	(2,273)		(4,911)
Total debt	$	455,534	$	768,121
Total liabilities	$	466,559	$	781,222

The assets of the VIEs serve as collateral for the obligations of the VIEs. The holders of asset-backed notes have no recourse to assets outside of the respective VIEs.