American court hearing recordings and interviews - QVC Group - Listen to the bankruptcy hearing held June 8, 2026 starting 2:06 pm

Episode Date: June 10, 2026

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Thank you, Your Honor. Mr. Meltzer, I just want to, in bringing the Cornerstone discussion to close for now, as part of a holistic deal that you had negotiated with Inc., was there enough money for Topco to pay the general unlawful? unsecured creditors? Yes. Would there be enough money to pay the administrative claims? Yes.

And were you able to negotiate for enough cash that would have enabled Topco to run the marketing process of Cornerstone that you discussed before? Uncertain. Was Inc. willing to leave any more money with Topco? No, they were not. and was ink willing to leave any more money with Topco that would have resulted in allowing Topco to run Cornerstone? Now, I asked you a handful of questions about the PWC opinion, and I'm not going to go into the opinion at all, but in light of reviewing the opinion, did that change the special committee's view of the risk Topco was,

facing regarding the deferred tax liability? No. You also mentioned before about the $400 million claim. I think you said something about being pleasantly surprised. Is anything about what was happening pleasant? No. What I like to know from you is how did the $400 million claim, Did you view the $400 million claim in light of the gets that Topko was receiving that you just laid out for the court before we broke?

Mr. Cobray, I think there are two aspects of it. One is we already made an attempt to get it down to $3.50 and it was rejected. So we were kind of limited by the amount of flexibility that we had with it. Can everybody hear me? You good? Your Honor? I can hear it. everybody was kind of limited at the $400 million number.

Therefore, the other value propositions in the settlement were not necessarily all monetary. In some respects, they're monetary because they reduce or eliminate the possibility of people coming at us for more money that we won't necessarily have, including the tax indemnity, including tax sharing, including advisory fees, including potentially things associated with the releases of the preferred. So when one looks at the settlement, when I looked at the settlement and I believe Ms. Flayton looked at the settlement, it was an aggregate picture. There were things in it that we wished we could have negotiated more for, but the reality was that Inc. was taking an extremely hard stand about it, and they had very significant additional

resources to be able to make our life pretty difficult. And specifically, what was your understanding of whether or not Inc. could emerge from Chapter 11 without resolving the claims against Topcom? Inc could clearly have done that. I'm sorry, you said it... I said ink could clearly have done that. And what was your understanding of whether, I'm sorry, Topco could emerge without resolving its claims? Topco would have had an extremely difficult time emerging because of all the claims against it.

And you had no clear path given the litigation profile from the litigation profile from the claims or potential. from the IRS to be able to pay general unsecured creditors and honestly to be able to pay either administrative claims or priority claims or anything. Okay. I want to now turn to what's the third tab in the book that's in front of you for the record DX-238. Mm-hmm. And have you seen this letter before? Yes, I have.

Is this a letter that was sent to the... Topco board? Yes. By Cleary Gottlieb? Correct. You're familiar with the Cleary firm, right? Yes, painfully sometimes. Do you know in what context the letter was sent?

The letter alleges for Mr. Brody that he, I can't remember exactly the words are, but that he is speaking on behalf of certain beneficial owners of preferred stock. And he goes on to say he implores the board to remember its fiduciary responsibilities to maximize whatever return that can be for the stakeholders of Topco. And is that something that you believe the special committee did? I believe he's right. We should be doing that.

And you believe that the special committee did it? We do. Okay. Now let's go back to the letter. In the letter, does Mr. Brody disclose who it was that he represented? He did not. And did you ever find, excuse, withdrawn. Are you aware that the preferred shareholder group said that the special committee ignored this letter?

I am aware of that, yes. Okay. And do you believe that the special committee ignored this letter? I don't believe that. I think that's a mischaracterization of what happened. We received the letter. We discussed the letter. We took it apart line by line as to what the requirements are.

And subsequently, I learned that partners from Kirkland and Ellis reached out to Mr. Brody to discuss the letter and discuss what the magnitude is of his representation. of preferred holders and did you come to an understanding that at the time when mr. Brody sent the letter what the percentage of preferred shareholders he was representing objection of foundation and if there is foundation it's your sake well your honor they're accusing the special committee of not acting on the letter I think his awareness of counsel making the phone call and speaking to mr. Brody I don't think it's I don't think it's

the truth of the matter, but did he know what was represented to him as it presented? So I'm going to overrule the objection. Okay. So what was your understanding of the amount of preferred shareholder interest that Mr. Brody represented? One to two percent. And just at the very end, in the penultimate paragraph, you see what, you see what, Mr. Brody says, this page two, page two of the, yeah, penalty of the last page.

He says, he expresses, well, withdrawn. Does he actually ask the special committee to reach out to Mr. Brody in the letter? You'll have to rephrase that paragraph. Does he actually ask the special committee to reach out to the, to Mr. Brody? No. What does he actually say? He said, if you would like to, discuss these matters further.

Our clients are willing to engage in a constructive dialogue. But after receiving this letter, or at the time you received the letter, you did think that the special committee was looking out for the interest of the preferred shareholders. Is that right? Correct. Now, I just want to talk briefly about the preferred shareholder groups' alternative proposal in their exclusivity motion. Have you reviewed that proposal? Yes. And after reviewing it, does this special committee believe it is a basis to exercise its fiduciary out?

No. Does the alternative proposal obtain a resolution for the intercompany claims? No. Does it resolve the issue of deferred tax liability? No. You mentioned before about getting coverage for tax liability. was the tax liability that was covered, one of the aspects, withdrawing. It was one of the aspects of the tax liability that was covered for known and known tax claims in the settlement.

Not in, withdraw. Let me back up. In the settlement, not the alternative proposal, but in the settlement, were you able to obtain from Inc. Coverage for all known and unknown tax claims? Okay. Did the alternative proposal provide for such protection? Not to my knowledge.

Does the alternative proposal provide for full payment to the general unsecured creditors? No. Your knowledge, does the settlement that you agree to provide for the full payment to the general unsecured creditors? Yes. Does the alternative proposal provide for release? for the preferred shareholders? No. Under the settlement agreement that you agreed to,

I think you already testified to it, it provides releases for the preferred shareholders, is that right? Right. And did the special committee withdraw? I think I meant to make sure clear on this. If the special committee have an understanding of whether in the absence of releases, the preferred shareholders could be subject to litigation?

I believe I've answered that already, but the answer is yes. Are you aware that throughout in this litigation that the preferred shareholders have argued that the releases are of no value to the preferred shareholders? I'm aware of that. Do you agree with that? No. Why? For a number of reasons.

The existing group of objecting preferred shareholders only represent about a third of the preferred shareholder only represent about a third of the preferred shareholder. class. The preferred class was a widely held and fully distributed preferred class that came as a result of a dividend on the common. Those were essentially the people that received the dividends, the $456 million in dividends. The preferred holders that are the objecting holders acquired their positions, I believe, after the petition date. I'm to be corrected about that so releases to them when they have no economic interest other than they're having purchased the shares post-petition has nothing to do with the potential claims that could be brought against honestly

retail holders that have purchased that have purchased or were subsequently transferees of people who had received the The dividends. Last issue is litigate, the cost of litigation. You've testified today extensively about that. Did the alternative proposal provide for funding for litigation if for Topco to defend against these claims? They did to a limited amount. Okay.

What's your understanding of what was provided? The term sheet that I have seen provided for all of the the assets of Topco to be transferred to a lit, using the term of art, a litigation trust. It's a delayed draw facility in the amount of $3 million. It has a, and I haven't gone back and look, but it has a significant interest rate. It also has backstop fees associated with it.

It also has a first security interest interest. on all of the assets of the litigation trust. And as a result of that, in my mind, as a finance lawyer, it puts the lender in a senior position to the holders of the preferred stock. And there is also a payment waterfall that has a, I mean, in parlance, it's almost like a make-hole over a period of time.

Did the alternative proposal... Sorry, go. Let me say maybe the most important thing. It's only for $3 million. That's not to say, in fairness to the proposal, that it couldn't be extended or improved or increased, but the proposal in front of me was only a $3 million deferred. delay drop instrument.

And what was your, what, what, what, was your expectation that the money that was going to be needed to fend off all these claims from ink was going to far exceed $3 million? Wasn't even going to be closed. Did the alternative proposal, with, did the funding scheme for litigation, did it change the special committee's views of the merits of, of accepting the settlement that you had agreed to?

No. Last topic. And that's the plan releases. So I'd like to talk a little about aspects of the Top Coast Special Committee investigation that relates to matters other than the intercompany claims. What transactions or events did Coburnim investigate outside of the intercompany context? As I testified previously, we we determine that the, because of the history and nature of the QVC entities as well as their relationship with Liberty, Liberty Interactive, that we believe and for a, in the fullness of an investigation, not only as a protective matter,

but also as an offensive matter to potentially pursue claims that were against some of these other entities, some of these other corporate entities. We told, we directed from a very early stage of Kobe and Kim to do an exhaustive investigation of prior directors, prior officers, anybody that was involved with the spin so-called spin-offs and we wanted to see whether there were any self-dealing transactions we also had them look at transactions that were spun off particularly the Zilluli so-called Zululi transaction and a very very thorough because for me I It was extremely concerned that we needed to – if we were going to grant releases to all these existing –

because some of them are also existing directors, some of them are former directors. We wanted to be sure that we had done everything we could conceivably do to assure ourselves that the estates should not retain any claims against these people and carve them out from the releases. And you considered whether the releases of the claims were in the best interests of the estate? I did. Did Coburn Kim also provide the Special Committee with views on the claims, their viability, and the defenses just yes or no? Yes. Does the Special Committee believe that Coburn Kim did a thorough investigation in those matters?

I definitely do. Do the Special Committee reach a conclusion ultimately about the plan releases? Yes. We did. And what was it? They should be granted. Among the claims that the special committee analyzed, did it identify viable claims against Topco's directors and officers?

As I just testified, we had you, we had Cobrey and Kim, do all the work that was necessary in order to assure ourselves that there were no viable claims that should be retained by the estate. And does the special committee support the releases? Do. May I have one moment, Your Honor? Yes. Your Honor, I'll pass the witness.

Thank you. All right, Mr. Glenn? Yes. So it's 226. Let's come back at 240.