American court hearing recordings and interviews - QVC Group - Listen to the bankruptcy hearing held June 10, 2026 starting 12:45 pm

Episode Date: June 11, 2026

opening with a presentation by the QVC bankruptcy case financiers

All right. Good afternoon. We're back on the record in case number 26-90447. Mr. Baker. For the record, you're on Nicholas Baker- Simpson, Duttrenton, Bartlett. Your Honor, I'll be brief. I stand to support confirmation of the plan. I think the record's clear. The standards have been satisfied and that the standards for the 2019 rule for the intercompany settlement have been satisfied as well. Your Honor, the RCF lender group collectively holds approximately 2.2. $1.7 billion of pre-petition claims. They're the largest credit constituents in these cases. We've provided support to this company, both prior to and during the case. We provided a $300 million dip LC facility. We've also provided the cash that's funding these cases, including

the payments to general and secure creditors, to bondholders, and a portion to the RCF funders as well. And that's because, as Mr. McCain noted, there was a draw in July of 2025 of almost a billion dollars on the revolver. That cash was parked on the balance sheet, and it's been sitting there. Obviously, Your Honor, my clients were not happy when that happened, but ultimately, we got to a fully consensual prepackaged deal. One of the key considerations in that negotiation was the treatment of the cash at QVC Group. It was as much about fairness as it was about economics. We wanted that cash to come back down to where we think it belongs. Your Honor, as Mr. McCain showed and the evidence supports, it's uncontroverted that the cash

that you've QVC group came from QVC Inc. Hundreds of millions of dollars of distributions, hundreds of millions of dollars under the tax sharing agreement. That cash then went out to preferred holders in excess of $400 million. So while the preferred holders have described it as quote their cash, we certainly would disagree with that characterization. Your Honor, it's also uncontroverted that the creditors at QVC Inc. will be impaired. The Evercourt valuation, which no one's disputed, has a total enterprise value of $2 billion for reorganized QVC. That's a docket number in 196, as compared to over $5 billion of just the funded debt at QVC, Inc, not including

other unsecured claims, customers, vendors, litigation claims. So while the banks and the bondholders at QVC get an impaired recovery, Your Honor, it's no surprise that one of the linchpins of the plan is that the QVC group cash come down to Inc from where it originally came. Mr. Keglevich testified that he wouldn't support any distribution preferred holders under the settlement because the QVC and creditors wouldn't accept it, and he was right. We agreed to a comprehensive restructuring, but not to go see cash go out to the preferred holders.

That was not going to be part of the deal that we agreed to to get to a prepackaged plan of reorganization when we were getting impaired. So, Your Honor, the false narrative presented by the preferred holders is that the disinterested directors should have negotiated code a better deal. But if better means sending cash to the preferred holders, that was just not a settlement, that the designated director, the disinterested directors of QVC Inc. would accept. So we think this settlement is fair. We think it's reasonable. It returns cash from where it was taken. It gives the preferred holders a release for the $450 million of distributions.

And it pays Gucks at Group in full and releases the tax indemnity claim. So we respectfully ask that you approve this plan and the intercompany settlement. All right. Thank you. All right. Anyone else in support of the plan? For the record, Angela Libby of Davis Polk and Wardwell on behalf of the QVC Inc. note holder group. Your Honor, our group holds about $2.3 billion of claims, so we are the second largest note holder group in this case. I'll be brief, Your Honor, and I'll do my best not to repeat the points that the debtors and Mr. Baker have already made. Your Honor, when we're talking about intercompany settlements, it's really easy to forget that there's an ultimate allocation of value that impacts actual investors. But that's of course the reason that intercompany claims matter because in Chapter 11 there's only so much value to go around.

And it's important that the value across the corporate group be allocated consistent with the claims within that group. During these cases, you've heard a lot about the PREF holders. These are equity holders of the parent who even though claims are being impaired here want to see a greater return on their stock. You've heard less, much less about my clients and Mr. Baker's claims. clients who has the only impaired classes of creditors at Inc. are the economic stakeholders impacted by the intercompany claims that are subject to the settlement. And the question for us is not the size of our returns, but the degree of our impairment. Listening to Mr. Glenn's opening, one may come away with the impression that the only stakeholders at the Topco are the preferred

equity holders, specifically his group of preferred equity holders, but the debtors have made it very clear that that's not the case. There's the management team and board that's getting finality. They're the retail holders who get to keep the millions of dividends that they received in the years leading up to these filings without ink initiating litigation to claw back those recoveries. And then, Your Honor, there are the creditors. There are the GACs who are receiving payment in full with the support of our clients. There's the IRS. Absent the settlement in these cases, the Topco would face the go-forward potential claims that would dwarf the value at the Topco. And then finally, Your Honor, importantly, there are the intercompany claims.

These are the claims that Inc. could have and would have asserted against Topco on behalf of its own creditors, namely our clients. Inc.'s recovery on these claims directly affects the investors who lent billions of dollars to QVC Inc. to support this corporate group and whose dollars were used to distribute to QVC group in order to make payments to equity. All of those claim holders at Topco, including the intercompany claims, need to be satisfied in full before Mr. Glenn's clients receive a dollar. That's how equity works. The argument that Mr. Glenn has put forward essentially amounts to saying that the TopCo directors had to drive value to equity, both by forcing Inc. to waive its tax indemnity claim and bear the go-forward tax burden of the TopCo and to settle its claim against the topco in a de minimis amount. Unless those two prongs were satisfied, there simply would not have been value left to ever go to the Prath. But, Your Honor, we'd submit that that's contrary to how bankruptcy works.

Absolute priority requires that claimants, even in the same. intercompany claimants are paid in full before equity receives anything. Under Mr. Glenn's rationale, the independent directors at Topco would have been required to fight to the death and expend the limited resources that Topco had in order to attack the intercompany claims, even though the directors are fiduciaries for the estate as a whole. Where again, absent the settlement, it's hard to see how there's any result where anyone other than the tax claims or the intercompany claims end up being the beneficiaries of that estate. And, Your Honor, there's been a fair amount of questioning whether the independent director,

in effect extracted enough value from Inc. On account of the holdup value that they had, whether they appropriately exploited the party's desire for a consensual prepackaged case. I'll confess that that was a new one for me. The idea that stakeholders working together to ensure that a retail company can get in and out of bankruptcy as soon as possible to preserve jobs,

customer relationships, estate value, to reduce professional spend and increase recoveries with somehow not a shared goal. And it was an outcome that was only possible because the investors at Inc. investors at Inc. made material concessions to facilitate that outcome, including, of course, paying all gucks in full. But again, Your Honor, I would submit that Mr. Glenn is thinking about this wrong, that the independent directors at Topco appropriately considered what was

right for their own estate, that they appropriately weighed the benefits of a consensual resolution of all of the claims at their box, that it would have been inappropriate for them to refuse to allocate value to credible claims by threatening to do further harm to their creditors by threatening to destroy more value both in their own box and at ink, all in pursuit of ensuring some level of recovery to out of the money equity. Finally, Your Honor, Mr. Glenn said during his openings that his group was not trying to blow up these cases, that they simply welcomed the chance to negotiate. But their basis for objecting to the intercompany settlement, that any settlement that doesn't

result in value to PEPF is definitionally unacceptable, regardless of the size of the claim senior to them at the Topco, and that the settlement, discussion should exploit every last ounce of leverage in pursuit of a scorched earth strategy belies that stated intent. Your Honor, as you consider the intercompany settlement and this plan as a whole, we'd respectfully emphasize the many concessions that the creditors in these cases have made in order to reach this result and preserve value for all the stakeholders across the corporate group. Thank you, Your Honor. Good afternoon, Your Honor. Aviloft of Aiken Gump, Strauss-Hm, Strauss-Haword, and Feld on behalf of the Linta ad hoc noteholder group in support of

approval of the intercompany settlements and confirmation of the plan. Your Honor, listening to the preferred shareholders' counsel over the past three days of trial, one would reasonably be led to believe that the Linta note holders are receiving a windfall under the intercompany settlement, but the reality is far different. There's approximately $1.5 billion in funded indebtedness at Linta from the Linton notes. And pursuant to the plan in the intercompany settlement, the Linta creditors will receive only approximately seven and a half cents on the dollar recovery for the Linta notes. The Linta creditors recovery under the plan represents a significant discount, not a windfall

for Linta creditors, and that's reflective of the compromises inherent in a good faith negotiated settlement. Now the preferred shareholders have also tried to establish a false equivalency between the treatment of the intercompany claims at Linta as compared to those at QVCG under the intercompany settlement. Preferred shareholders have suggested that the difference is a byproduct of the fact that the Linta note holders were represented in the negotiations by Aiken and Centerview. But I'll submit that the reality is that the difference in treatment in the intercompany claims has far more to do with what Mr. Keglovak told the court about. Namely, that Linta has strong defenses to any intercompany claims against it, notably to claims related to the $1.8 billion promissory note,

and that Linta also has claims against QVCI, QVC, and its directors and officers, which it absolutely would have pursued absent a settlement. Now, the $1.8 billion promissory note was created in furtherance of the deferred tax liability transaction involving the Linton notes. And as Mr. Watford and Mr. Keglovak testified, Lint is a disregarded entity, a DRE, meaning that Linton never received any benefit, tax benefit, nor did face any tax liability in connection with the transactions that gave rise to that promissory note. Rather, that tax liability rested with QVCG, who is Linta's sole and controlling member and the QVC tax group, of which Linta is not a member. QVCG and the tax group received the tax benefits of the deferred tax transaction that gave

rights to the promissory note. And accordingly, that's why Linta's independent director, Mr. Walper, indicated in connection with any claims against Lenza related to the promissory note that Linta would have had brought claims and defenses related to equitable subordination. recharacterization, fraudulent transfer, and breach of fiduciary duty. And it's also why Mr. Walper declared it was the position of the Alinta ad hoc noteholder group that in any settlement, the promissory note must be disallowed in its entirety. That promissory note was not for the benefit of Linta.

It was for the benefit of QVCG and the taxpayer group. And it was imposed on Linta by its sole member, QVCG. Further, Mr. Keglovak testified that QVCI was a, aware that Linta had strong claims against the other estates in connection with the transfer. Your Honor, it's simply intellectually dishonest to point out the fact that the aggregate intercompany claim number against Linta is larger than the one against QVCG without recognizing the fact that that number is almost entirely made up of the $1.8 billion promissory note, which both the independent directors at Linta and QVCI agreed there are strong.

defenses. In contrast, the preferred to provide no evidence that QVCG could have credibly contested the claims against it. Now, despite the strengths of these claims and defenses, the Linton note holders, like the other estate creditors, recognize that litigation is costly and time-consuming, and thus the intercompany settlement is in the best interest of it and its stakeholders. Nothing we have heard at this hearing has challenged that. No evidence has been offered that what was agreed to in the intercompany settlement is not within the range of reasonables, nor that is not fair, equitable, and not in the best interests of the estates. Rather, what we have heard

from the preferred shareholders is a cynical argument, that regardless of any good faith basis to contest the claims against it, QVCG should have burned away in litigation it and the other state's resources and recoveries for their creditors unless QVCG's equity was paid off. The evidence is clear that the intercompany settlement was entered into by all parties in good faith is reasonable, and we submit it should be approved and the plan confirmed. Unless Your Honor has any questions, I have nothing further. Thank you. Thank you, Your Honor.

Good afternoon, Your Honor, for the record. Robert Feinstein, Picholsky, Stang, Zeeland-Jones, proposed counsel for the official committee. To be clear, you've heard from the last of the RSA parties, the committee is not an RSA party. And it'll come as no surprise, Your Honor, that the committee supports confirmation of the plan. And from all evidence and the arguments have heard, the plan should be confirmed. And it's not surprising, I know, because the plan provides for unimperment of the general unsecured creditors. But it does a lot more than that, and I'd like to just take a step back and look at the benefits of the plan. Not only are creditors paid in full, but QBC is reorganizing and deleveraging by approximately $4 billion.

This benefits all of the committee's constituents, including more than 15,000 employees and the many large and small businesses who sell their products through QBC and depend on that. sell-through channel. And of course, the landlords of Cornerstone and many others are benefited by a high-quality plan of reorganization that's been proposed. And recently, Chapter 11 has come under a lot of scrutiny and criticism because of LMEs and the amount of fees and so forth. But looking at QBC's restructuring, Your Honor, this is the paradigm of how a company should use Chapter 11 to financially turn itself around and emerge as a stronger company. This is a result that should be encouraged, not attacked. But it came under attack almost immediately. So the committee was formed on May 6th, about three weeks after the petition date,

and a week after multiple shareholder groups moved for the appointment of an official committee with the expressed aim of overturning the plan because equity wasn't getting any recovery. So Mr. Glenn has attacked. Why is there a committee or unimpaired? to the committee, there's no unsecured claims at QBCG, these are red herrings. None of the creditors in this case are going to be satisfied in full unless the plan gets confirmed. So kudos to the U.S. trustee's office for forming a committee and allowing us to defend the interest of unsecured creditors across all of the entities, all of whom stand to lose if confirmation is denied at the behest of the preferred equity group.

So two days after the committee was formed, the ad hoc group found a motion to terminate exclusivity, we join the others in urging that motion to be denied, in that even if, and it's just counterfactual, even if this plan is not confirmed, the better should have an opportunity to fix whatever defects Your Honor might find before terminating any exclusivity in creating total chaos in this case. So the solution offered by the preferred group is really unworkable and will lead to chaos and damage to all the constituents. What they propose to do is strip out QVCG from the plan and propose a separate plan just for that entity,

and they say, incredulously, that the other debtors can go forward and continue to reorganize. It's not going to be a problem for them. That's a ridiculous statement, Your Honor. It's really shocking to me that somebody could make that argument with a straight face, somebody who's read the plan. The plan is an interdependent, holistic, restructuring of all the debtor entities, and the linch pit of that plan is the intercompany

settlement among the many debtors, including QVCG. There is no way for the rest of the debtors to continue on the path they're on if you pull QVCG and you pull the intercompany settlement out of the deal. It would kill the restructuring. It would kill the company and kill the livelihood of thousands of employees and families who depend on them. So while they would like to look at this in isolation, the reality, this is like the Jenkjillo. a tower my kids used to play with. If you pull out QVCG and the intercompany settlement, the whole thing collapses. And we're left with a morass of litigation, tremendous uncertainty, tremendous tax liability, and an enterprise that is poised to emerge and succeed is going

to be mired in months, if not years, of litigation and maybe liquidation. So we viewed that effort as a major threat to the general insured creditors. So after we were appointed, we didn't want to duplicate anybody else's work, but we thought it was appropriate to take a look at what the ad hoc group was doing and who they are. So we noticed the deposition of Cygnus, who's the largest member of the preferred group. And earlier this week, by Zoom thank you, I introduced excerpts from the deposition, but I didn't get into the meaning of what those facts were. But what we did learn is that Cygnus is a vulture investor, I mean, opportunistic, distressed,

whatever. This is an entity that specializes in distress securities. And the testimony is that about a year or so ago, Cignaz bought 100,000 preferred shares in the mid-teens. But what they did post-petition was truly remarkable, Your Honor. They bought 1.1 million shares after the petition date between the time of the April 16th petition and the first 2019 statement filed by preferred lawyers showing that Cigna's own 1.2 million in share, a change of shares. So they increased their holdings by 1100% after the petition date. With the idea, obviously, of trying to disrupt the reorganization and the plan process. So the purchase of the shares post-petition, the witness testified, was between 40 cents a share and $2.50 a share.

And importantly, those shares were purchased by the largest member of the preferred group after the petition date, after the plan was filed, after the intercompany settlement was announced. There's a lot of argument you hear from the efforts, oh, there was never any disclosure that these intercompany claims existed. Cigmas can't make that argument because they bought in knowing that there were intercompany claims, that there was a plan and an intercompany settlement. So we also inquired in Mr. Gagman's deposition about the so-called alternative plan and found some interesting facts there. First of all, the motion-determinate exclusivity set us to the general unsecured creditors of QVCG. They would get, quote, a de minimis, sorry, air quotes don't show up in the transcript, de minimis distribution, and that they would receive the rest, perhaps, at the conclusion of any intercompany. claim litigation, but it might never come.

And then when we got to Mr. Gagnett's deposition, he contradicted that statement. He goes, no, the QBC general registry creditors are going to receive 75 to 95 cents initially, and that they would be paid the remainder upon the resolution of the intercompany claims, regardless apparently of the outcome of that litigation, and that they would get interest on top of that. So the fact pattern suggests, your honor, artificial impairment. QBCG has $170 million. The general unscured claims are less than $10 million, but they were going to deliberately pay less than in full to those creditors

so that they could try to say that there was an impaired consent in class. It's the same 11-29-8-10 argument. So that argument won't work here, Your Honor, for the reason that there is a committee. And the committee would urge if that plan ever saw the light of day, and it shouldn't. If that plan ever were sent out for solicitation, You can be sure the Unsecured Creditors Committee would solicit creditors to reject that plan because it's not in their best interest. They're getting full payment under the Debtors plan,

and they're being used as a tool, I guess, for the preferreds to try to develop an argument that their plan satisfies 1129-8-10, and the debtors doesn't. But the Unsecured Creditor class, if they listen to the Unscured Creditors Committee, and they don't always do that, but if they followed our instruction in that, that class would vote to reject the plan. There would be no non-impaired consenting class. And you heard an eloquent argument from debtors' counsel about why the 1129-810 isn't an issue for them as well. We also learned about the concept, the plan, about how they were going to conduct the litigation of the intercompany claims.

They would propose to put all the assets of QVCG into a trust and then litigate with QVC Inc. And how were they going to fund that? What we saw was a commitment letter of sorts. It's got a lot of holes in it from the same Cigness who bought the shares post-petition proposing to fund $3 million into the estate, but it would only be used for expenses of litigation. Witness said that he expected that Mr. Glenn and company would pursue all the litigation on a contingency. You heard from debtors' counsel about how that approach would be insufficient to litigate the kind of major litigation that we're talking about, it would be a huge mess and doesn't lead to any place good.

So the artificial impairment argument was particularly troubling to us. The artificial impairment argument requires both this kind of maneuver to pay creditors deliberately less than in full, and it requires a showing that that's done without good faith. So we believe that this would not be a good faith effort to create a non-impaired class. So when the smoke clears, you've got the alternative concept of a plan that would not be proposed in good faith, fail that confirmation requirement, and also fail the 1129-8-10 argument, both of which they're attacking the debtor's plan on, but it's their plan that would fail on those requirements. In contrast, the debtor's plan is confirmable.

I am not surprised to see the usual tour de force from Kirkland Ellis. In support of confirmation, I'm not going to repeat any of that. I do want to make a couple of comments as a compliment to that argument. So first, I want to talk about the dividend claims. You heard testimony that initially QVC Inc. demanded a very large intercompany claim against QVCG, and there was pushback, and one of the things that the independent directors of QVCG requested was that there be a release of the preferred stockholders of QVCG who received upwards of $450 million of Bivided claims. So that's more than a theoretical issue, Your Honor, because if you accept the fact that the QVC Inc claim against its parent, QVCG,

is a valid claim, and it's for more than the assets in the QVCG estate, the QVCG estate would be well within its rights to pursue recovery of the dividends as fraudulent transfers and illegal dividends from the preferred stockholders. That money would come back into QVCG to satisfy the intercompany claim if there were no settlement. So there is real value to the preferred shareholders in getting that release. It's real exposure. And the response that we've heard is, well, there were solvency opinions. So those dividends aren't recoverable.

So let me offer up, Your Honor, a skeptical committee's lawyer's view of solvency opinions. Sure, every time there's a highly leveraged transaction, where directors will go out and seek a solvency opinion, for many years, has been Duff and Phelps. They've rebranded as Crowell. I think the first time the Duffin-Felps' opinion came up in the courtroom, I saw a number of eyes roll, because those are papers that are commonly obtained in connection with highly leveraged transactions, but they don't make the transaction bulletproof. And case in point is a case that quite a number of the parties, the lawyers in this case, were involved in,

the first pay less bankruptcy in St. Louis. We represented the committee, Turkranelles, Mr. McCain represented the debtor, Mr. Walper, who's an independent director here, was counsel to the independent directors in that case. Mr. Reesman was in that case. Anyway, the case started with a plan that basically gave a de minimis recovery to general unsecured creditors and a release to the board and a release to private equity who had received several hundred million dollars and a dividend recap prior to the bankruptcy. And we were told by the assembled group on the other side of the courtroom, there's nothing to see here.

And what we did was go after the Duff and Phelps opinion, tear it apart, break it down, and show that there were infirmities to it, as somebody noted before. These opinions are often based on management's projections. Sometimes are they overly optimistic and lead to an erroneous finding of solvency by Duff and Phelps. So it's not a bulletproof protection anything but. And in fact, after being told in the Payless case, there's nothing to see here. We ended up getting a settlement for general and secure creditors of over $30 million instead of, I think, $250,000, which was offered at the outset. So the point of all this, Your Honor, is that there are real claims in this case against the preferred. The release given to them is real value.

Good on the QVCG board for asking for that. They didn't have to, but they did. So it's not like the prefers here are getting stiff. They're getting something very valuable, which is immunity from potential. up to $450 million of liability. Because if the intercompany claim is several billion, there's really no end to pursuit of those dividends. It'll still leave the intercompany claim short of recovery.

So even though the preferred shareholders weren't part of that negotiation, the independent directors did a good job in for their benefit, which is to seek and obtain an agreement on a release. So the... The best interest argument that the preferreds have made have said, well, wait a minute. If there was an illegal dividend, I should be allowed to sue the board. So I should be able to bring more money into the estate for the preferreds. That's not necessarily true.

Both things can be true that these dividends are fraudulent transfers that are recoverable and that the board is immune from liability because they did what they're supposed to do. They have counsel. They went and got a solvency opinion. So they acted in good faith, so I don't think there's any liability there. So both, like I said, both things can be true, the dividends can be recovered, and they may not be subject to suit. And I think that's important in terms of addressing the best interest argument because the preferred they're trying to come in the back door saying, well, if you, if those dividends were bad and we have exposure, then we want to sue the board. So the process that was performed here was obviously quite elaborate and extensive.

in terms of the four boxes, getting independent directors, ongoing negotiation over several months, not over a few hours. And what resulted is a settlement that I don't think anybody can dispute, Your Honor, is not only above the lowest point of and the range of reasonableness, but here well above it in terms of what it achieves economically in terms of that settlement and what it does for the greater enterprise in terms of facilitating a high-end reorganization. So on one side, Your Honor, you've got all the creditors, the official creditors committee, all the fiduciary supporting a settlement. And on the other side of the ledger, you have Cygnus, who bought their shares post-petition.

Seems to be the only party, according to the testimony, willing to fund any kind of litigation post-petition or post-confirmation under their plan concept. And we've got, you know, a lot of people, very serious project. here to resuscitate this company and a vulture investor who's willing to roll the dice. This is, there's a lot of adjectives for it, Your Honor, but I'll just say that it's opportunistic to do what they've done, but it was also tremendously expensive. At the time we were formulating discovery, the preferred stockholders put out five expert reports from different folks at FTI. And again, none of those are being presented to Your Honor.

That was a very expensive exercise. I sat through two of those depositions. I guess I'll never get that time back. But there were upwards, there were at least 25 people by my count, Your Honor, in those depositions who were being paid by the estate, whether it was debtors professionals, independent directors professionals, secure creditors who have a right of reimbursement, their professionals and the committee,

I did rough math, you rather, each one of those depositions just a deposition time had it cost at least a quarter of a million dollars, and that's excluding preparation time, counter-expert reports, on and on. This was a huge waste of time and money, but it was, I think, intended this to create commotion, excitement, you know, a lot of expense, a lot of activity in the hopes perhaps that maybe the other parties to the case would get into a mediation, try to give some money to them to make it go away, they didn't do that. I'm glad they didn't do that. It would be wrong to reward this kind of hyper-aggressive behavior. So I'm glad everybody stood their ground and got to today so that

Your Honor could hear the full panoply of evidence and legal arguments. So I'm going to stop here, Your Honor, and just say simply that the committee wholeheartedly supports confirmation of the plan and denial of the motion to terminate exclusivity. Thank you. All right, thank you. Does anyone else wish to speak in support of confirmation? All right, Mr. Lynn. We have five minutes. Yes, technology, please thank you. All right, it's 117.

Why don't we come back at, let's just take 10 minutes. Let's come back at 130. Thank you.