American court hearing recordings and interviews - QVC Group - Listen to the bankruptcy hearing held June 8, 2026 starting 4:04 pm

Episode Date: June 10, 2026

continuing questioning of Mr Meltzer

All right, we're back on the record in case number 26-9-047. Mr. Glenn. You ready, Mr. Meltzer? I am, sir. Okay. So we looked at the deck a moment ago of February 12th. Would you mind having somebody pull it up? No, I'm...

Okay. I'm putting this in context. You wouldn't mind. Sorry. So we looked a moment ago at the deck that Cobre providing provided you on February 12th with the preferred shareholder release section that you just testified about the next one I would like to pull up for you is a February 13th deck PX 153 I see it so I believe you were asked some questions by mr. Cobre about this

document in your direct But you have a general understanding that this is a position statement that was provided by your counsel to the Caton firm who represented the QVCI independent directors, correct? Yes, sir. Okay. And but in fact, you don't even know what positions in this deck were actually communicated to the representatives of QVC, Inc., correct? What? I have subsequently learned that it was communicated to all the counsel and the directors. You subsequently learned, right?

After your deposition, you learned that, right? When I had a discussion with, and I looked at the deck and I had a discussion with Mr. Cobre. But that was during the course of this trial, right? That wasn't before you finalized your intercompany settlement, right? I'm not I'm not I'm not I'm not what's he what there's no foundation for well I asked him when this conversation occurred yeah it was during this trial yeah it was after the intercompany settlement correct it was after the intercompany

settlement yes sir okay so going into this important settlement meeting you didn't know whether your council had even communicated the positions in px 153 correct I think that's an overstatement. We were very well aware as independent directors of Topko that there were ongoing iterative discussions between the directors and between the council. To the extent I don't know whether this specific deck was provided to them, the answer is yes, I do not. Okay. So let's go to your deposition transcript at page 155 line.

18. You want to give me a page number, sir? Yes, it's page 155. Okay, yeah. Okay, and feel free to look above what I'm going to read to you in case you need contacts for this, but were you asked these questions and did you give these answers? Can you confirm whether or not the settlement position in this deck were in fact communicated to QVC Inc. stakeholders as part of those negotiations?

answer, I have no specific recollection as to exactly what was communicated when. Did I read that correctly? Yes. Now, let's go to page two. Page two of the deck. I'm sorry. You could take the transcript down. So on page two of the deck, I believe you were asked questions on this on your direct.

It says, clawback claims by QVC Inc. against Topcoe are not likely to be. be viable. Do you see that? I do. Okay. And further down, it says, we do not believe that ink can make the requisite showing on insolvency. Do you see that? You do. Okay. But going back to the Topco claims are not likely to be viable, you don't know whether your counsel communicated that position as articulated in this deck to QBC Inc. Do you?

I believe that my counsel did communicate it to them, but I don't know. know when or in what form. Okay. Let's go to your deposition. Page 158, line four. Yes, sir. And feel free to look above to make sure I'm reading this in the right context. It says, question, do you know whether it was communicated to QVC Inc? Yes or no, the clawback claims by QVC Inc against Topco were not likely to be viable? Answer, I don't know. Did I read that correctly, sir? You did. Thank you. Now, let's go to page three of the deck. Now, you argue in this, or this deck argues, I should say, that the Evercore analysis provided by Kirkland on February 9 does not demonstrate that QVC, Inc. was insolvent, both as a factual matter and as a legal matter, as courts generally do not rely on trading prices to determine insolvency.

Do you see that? They do. Okay. And do you recall that that was the only insolvency evidence that was provided by QVC, Inc, other than this ratings information that you have testified to? Yes. You have no basis to say that trading prices are not a reliable evidential source to determine insolvency, right? Okay. MR.

I can say that the evidence of source. MR. Right. You don't know as what this – you have no basis to dispute whether this Dex statement is correct. That as a legal matter, courts generally do not rely on trading prices determine insolvency, right? MR. I'm generally aware of that.

MR. Now, are you aware of the methodologies that courts actually do use to determine solvency or insolvency? Well, I'm not. I'm not a restructuring lawyer. I may have general sort of high-level understanding of it, but I would rely on my counsel to give me that kind of advice. Okay. Well, you ever heard of a discounted cash flow analysis? Surely. You never commissioned a discounted cash flow analysis for QVC, Inc. did you?

No. And you're familiar with the term comparable company analysis, are you? Of course. You never commissioned a comparable company analysis for QVC, Inc. during your work as an independent director, right? Correct. And a comparable transactions analysis. You never commissioned one of those during your work as an independent director, did you?

Correct. Okay? Now let's turn to the page on text, page four, I'm sorry. It says the magnitude of damages assertible by QV Inc. is subject to certain key limitations. Are you asking? No, he's going to pull it up. Okay, he did. Okay.

He's on your screen, sir? Yes, sir. Okay, do you see that I read that, that legend there? The magnitude of damages was alleged? Yes, the magnitude of damage is assertible by QVC Inc is subject to certain key limitations. I see that. Okay. And then under the second bullet point, it says under the tax sharing agreements,

Topco was obligated to pay consolidated taxes on behalf of the group, out of the tax payments made by Cornerstone and QBC Inc. and accordingly need not return tax-related payments made by QDC Inc. Do you see that? I do. Okay. And are you aware of the testimony of Mr. Kearns, the tax executive at the company? I'm aware that he testified.

I have not read his testimony. Okay. And are you aware that he was interviewed in the course of the special committee's investigation? Yes, I am. Do you have any reason to believe that this statement is not true? No. Okay. Now, and then it says beneath that, similarly, debt-related dividend payments were effectively earmarked for debt service to third parties, per N, and all such payments post-2020 to link to creditors.

Did I read that correctly? Yes. You have no basis to indicate that that's not true, correct? Correct. So, let's go next to PX-154. For the record, PX-154 is the pre-ex154. presentation to Milbank and Coburn and Kim by QVC Inc. And it's entitled presentation regarding potential valuable and viable

and viable QVC Inc. claims and causes of action. Do you see that? I do. And this is also dated February 13th of 2026, correct? Correct. So the special committees of QVC Group and QVC Inc. are agreeing to court. the exchange of information on specific days for this intercompany settlement negotiation, right? I would characterize it slightly differently. I would say that in connection with that meaning they were providing their position statements as to where each of the boxes stood with respect to potential, as the cat and deck says, potential potential valuable and viable claims and causes of action.

Okay. So did you see this deck before you finalized the intercompany settlement? Yes. Okay. So I'd like to turn your attention first to the executive summary page on page two. So this page shows potential claims against Linta of around $2.3 billion and potential damages against Topco or QVC group of 1.3 billion, correct? Correct.

Okay. During the course of your work as an independent director, did you monitor the negotiation status of QVC Inc's discussions with the Linta representatives? Only at an extremely high level. Okay. And where did you get that information? Largely from the advisors. Okay, so your advisors were aware communicating to you what was going on.

with the LinkedIn negotiations? They were generally kept in the loop as to the negotiations that went on with the various boxes, yes. Okay, and so let's go next to the tax issues in here. I believe you've testified that you're generally aware with the deferred tax liability issue existing at the QBC debtors, correct? Yes. Okay, but you're not a tax expert of any kind, right? Thankfully not. Okay, you're you never were practiced as a tax lawyer right thankfully not okay and so as between you and PwC the representatives of PWC that delivered that opinion are much more knowledgeable and

experienced than you about tax matters right as to the specifics of individual tax positions for sure okay now now I you were aware of the tax insurance that was procured by the company to deal with the deferred tax liability, correct? I was aware from early on that that tax insurance was being sought, yes. Okay. And you testified that the premium for that was around $36 million, correct? We're $925 million of coverage.

Okay. Now, I'd like you to turn to page 14 of this deck, if you would. So this indicates on the title that QVC Inc should not bear the cost of tax insurance. Do you see that? I do. But you never proposed to QVC Inc that as a settlement mechanic, QVC Group would fund the tax insurance and just deal with that aspect of the settlement that way, did you? Well, I have to know, did you?

Well, again, I don't think it's subject to a yes or no question. we were very interested in a sharing, potentially of a sharing, or alternatively in connection with an ultimate settlement, that QVC Inc. should bear the entire cost of the tax insurance. I'm asking you a different question, sir. Did you propose, on behalf of QVC Group, as a settlement mechanic, to deal with this tax issue, that QVC Group would bear the cost of the tax insurance?

insurance for everybody and resolve that particular issue using that mechanic. You never made that proposal, did you? We did not. Okay? And in fact, you never even explored getting tax insurance for QVC group, did you? We thought about getting tax insurance for QVC for Topco, but we understood what our funding limitations are. And we also understood that no matter what tax insurance we might be able to be able to

to procure that the magnitude of the tax liability as well as our obligations under the tax sharing agreements and the indemnity agreements and so on and so forth would still put group top go at a significant risk well okay so we've established that you never made that proposal but you never even explored getting tax insurance for QBC group did you we didn't explore it Again, we thought about it and we put through various advisors, we put feelers out into the market as to what it would cost in order for us to completely cover, completely is always a strange word when you're dealing with the IRS, but cover substantially the tax liability, the potential deferred tax liability. Let's go to 216 of the deposition, please. Line 13.

Page 216, sir. 216. It's on the screen, too, if that's easier for you. Okay. Thank you. Thanks so much. Question. Were you asked these questions and did give these answers? Did you explore obtaining that insurance on behalf of QVC group?

You only gave me one word answer, and the answer you gave me was no, correct? Did I read that correctly? Yes. Thank you. So, let's go. to, oh, and the, you could have afforded the tax insurance, right? Tax insurance cost $35 million, and you had $200 million of cash on the balance sheet. There was no issue with you not being able to afford a $35 million tax policy.

Mr. Glenn, I would say that tax insurance and the cost of the tax insurance and the amount that it was covering, given what our liabilities were, it was not a useful way of spending $36 million. Okay. What value, what was the maximum value that this tax indemnity ultimately could have yielded by the QVC Inc. estate against QVC Group? What's the most it ever theoretically could have gotten? Well, it depends on how you evaluate it. the overpayment, so-called overpayment, or the retained payment was over,

and while there have been different numbers bandied about here today, my understanding of the number was it was $691 million. So your testimony is that there were $691 million of assets at QVC Group? No. Okay. So what is the most that ever could have been recovered from QVC Group if this claim were litigated and asserted? Well, given the fact that there was a tax indemnity, I mean, you tell me as to what the magnitude of the potential recovery could have been by the IRS.

Well, isn't all of this bounded by the asset value of QVC group? The most anyone could ever get from the QVC group is the actual asset value existing there, right? I suppose that's correct. And you don't know what that asset value was because you never got a valuation of Cornerstone. We did not get a valuation of cornerstone. And the intercompany claim here was $400 million, correct? The settlement was. The settlement number was $400 million.

Right, and that captures all of the asset value at QVC Group. Does it not? Correct. Okay. So providing insurance coverage of $925 million would have been a better alternative for all stakeholders than just giving them the asset value at QVC group, correct? Well, I guess the way I would answer that question is better, meaning would it have offset a significant part of the ultimate potential tax liability? Yes. I'll rephrase that question a different way to be more precise.

Those stakeholders would have gotten a better recovery from the insurance because more value would have been offered than the asset value existing at QVC group, correct? That's math. Well, that's math, but that's math that goes to the IRS. Or to this indemnification claim against the reported indemnification claim against by QVC Inc., right? Yes. Okay. Let's go to Exhibit 156. Okay. Exhibit 156 is a February 23rd letter from Stephen Reesman of the Caton firm, and they represented the Inc. Special Committee, correct?

Yes. You've seen this document before today, right? I have. And you saw this document before you finalized the intercompany settlement, correct? Correct. Okay. Let's turn to page four. So I know you're not a bankruptcy lawyer, but I want to just ask your general understanding.

Do you understand that for the fraudulent conveyance claims that have been threatened by QVC, Inc., that the fundamental points, the fundamental thing that they needed to prove to prevail on that fraudulent conveyance claim was QVC Inc and Solvency. I do. Okay? Yes. So in this letter, page four in the first full paragraph where it says with respect to the disputed claims is the lead in, four lines down it says, however, QVC Inc recognizes that evidence

of solvency is mixed and a fight over subvency. solvency would come at a significant expense and delay. Do you see that? I do. So going into this negotiation, they communicated to you that they had risk on the issue of proving insolvency, right? I say that that sense suggests that, yes. And they had proffered no evidence to you of insolvency other than the bond

prices prepared by Evercore, right? As I recall, I don't really recall whether they provided anything else. Okay. And those bond prices excluded the ones I showed you earlier today, right? There were two. That's fine. Yeah. Okay.

And so going into this, we have a settlement term sheet attached at the end as exhibit A. And this is, as you understand it, the proposal from the QVC Inc. disinterested director special committee for the settlement meeting that was scheduled to be held at Kirkland in the days immediately after this, right? I have no reason to doubt it. Okay. How'd you seen this before today? I have to see more than the first page, if you wouldn't mind.

Okay. So let's go to the term sheet. You're at the term sheet? Yep. Okay? Yes. So the term sheet says, allowed QVC Inc claim and it says at least 400 million unsecured claim against Topco.

Do you see that? I do. And I believe you testified that you were pleasantly surprised by that number because they had threatened a higher number, right? Correct. But $400 million would have captured all of the asset value at QVC group at this time, right? That's correct. So it didn't matter whether they asked for $500 million. million dollars, right? Isn't a loud claim?

Well, again, I think our view also was at a $400 million level. They were they, and I'm not crawling into their heads either, had reached the conclusion as to a level of recovery that they made achieve. Okay. But I just want to triangulate on what this offer meant versus a higher liability offer whether the number was $400 million or higher, it didn't matter because at any range after $400 million, they were going to take all of QVCG's assets. Am I right? That is correct. So having a billion-dollar claim amount wouldn't have yielded them a penny more than $400 million, right? As far as the claims go, that's correct. Okay. Now, it says here, treatment of preferred and common equity at Topco, and then it says, holders of preferred and common

equity at Topco shall receive no recovery on account of their interest. You see that? Yes. Okay. And it says at the bottom, effectuation, right? A factuation via a prepackaged Chapter 11 cases and Chapter 11 plans to be filed in the bankruptcy court, right? That is correct.

Okay. So they're telling you that they want to do a pre-packaged plan as part of the settlement negotiation, right? Correct. Now, so you go into the meeting in person on the 24th at Kirkland and Ellis, correct? Correct. Okay? And you testified earlier that you attend and Mr. Flayton along with Cobrey and Kim, correct?

Right. Those were the only representatives of QVCG to attend this meeting, correct? As well as counsel, yes. Counsel is Cobrey and Kim, right? Yes. But you didn't bring that superstar tax advisor that you testified about earlier, Mr. Warner, did you? He did not. Okay.

So you had no one there to argue your tax position at this settlement meeting, did you? Yeah. That's for him to answer. Mr. Warner was not there. Correct. Okay. And the Cobury and Kim lawyers are restructuring lawyers, not tax lawyers, right? That is correct. They didn't bring a tax lawyer to this meeting, did they?

They did not. Okay. And the information that you had at this. meeting concerning solvency, I think you said before, with similar information that had been provided by Kirkland and the other debtor's advisor concerning solvency, right? That is correct. That's true as far as solvency goes. And you felt, you didn't feel the need to hire a solvency expert because everybody was

operating from the same information, right? That's correct. Okay. But wouldn't it have been better from a negotiating position to bring someone who could actually advocate for you with more information than what these other conflicted advisors provided. Those conflicted advisors were not advocating for us. Exactly. The only people that were advocating for us were our counsel. Right. But wouldn't have been better to come with as many professional people that you could to advocate robustly for the benefit of QVC group?

I disagree with that. I believe that the more the advisors bring their own frame of reference to any kind of situation, it would not have enhanced the negotiation, and it would not have, in my view, put us in a position where, unless everybody was going to bring all their advisors, it would not have enhanced our ability, given what the framework was, to negotiate. an ultimate settlement you don't know how mr keglovak would have reacted if you brought a solvency expert to this meeting to you you can't say that I can't crawl into mr keglovich's head I do know what mr. keglovick said to me in the courts of that

meeting as far as any return to the preferred so let's go next to PX 157 so I believe that you're asked questions about the on your direct examination. This is the response of term sheet that your counsel provided to the Catton proposal in the last exhibit we saw, correct? I believe so. Okay. And going to the allowed QVC in claim, the proposal that was made was $350 million rather

than $400 million. Do you see that? Yes, I do. But in this term sheet under treatment of preferred and common equity of Topco, it still says, holders of preferred and common equity at Topco shall receive no coverage on account of their interest. Do you see that? They do. So it didn't matter in terms of stakeholder recover whether you reduced the claim from $400 million to $350 million, did it?

it. Ultimately now. And the preferred equity recovery was zero dollars in cash, correct? Correct. And that's exactly what you were told in the February 12th deck that showed preferred preferred shareholder recovery was only going to be a release, correct? I'm going to overrule it. I mean, you know, the deck said what it said. You saw that. You saw that. I'll start it. Let's make this 100% clear. You saw that deck earlier, right, where it said preferred recovery release, right? You remember that. Yes, right? Okay. And it didn't say any cash recovery than a preferred, did it? We established that, right? Correct. So the final, strike that, the first proposal you made in writing in response to the Katten term sheet was exactly what the potential recovery presented. presented in that deck before any of these negotiations started. Isn't that right? Well, again, the negotiations were extremely iterative. As I've testified before, we attempted to get $25 million to the preferred in cash. It was not, it is not in the term

sheet. I admit that because, as I've testified before, Mr. Keglevick was completely and utterly clear that it was a non-starter and he, under no circumstances, was going to enter into a settlement, however one characterizes the settlement, with any money going out to the preferred because, as I testified before, their view was that they preferred to have already received $457 million in dividends. And there was a substantial discount being realized by the debt holders at Inc. as to, you know, what their levels of debt were going to be and what the overall, honestly, leverage was going to be at the enterprise. So from, Mr. Keglevick's point of view as the counterparty to his, at me being the, me and Ms.

Flayton being the counterparty, there was nothing to discuss. It was not on the table. It was not on the table, $25 million, right? Correct. Okay. But you never told Mr. Keglovick, I'm not doing this deal unless the Prefords get $100 million, did you? I did not. You never told Mr. Keglovak that you wouldn't do this deal unless the preferred got $50. $50 million, did you?

I did not. And you didn't even insist, you didn't even insist that the preferred shareholders get this $25 million number that you've alleged was made at this meeting, did you? I did not. And you had that right, didn't you? I have that right as well as I have the right in the context of negotiating to provide value associated with other terms that protects all of the stakeholders as far as ultimate liability. I have that right as well. No one had a gun to your head

to leave that room to walk away with the preferred shareholders getting nothing, did they? No one had a gun to my head, correct. You could have walked out of that room at any time and said, I'm not doing this deal. This is unfair to the preferred shareholders. You could have done that, didn't you? I could have. You didn't do that, did you? Correct. You stayed in that room, didn't you? I did. And you showed Mr. Keglevick that he could get his way because you showed no strength to protect the preferred shareholders and their recovery.

Isn't that right? I'll withdraw the question. So Mr. Meltzer, we've talked about Cornerstone. So in this term sheet, the ultimate disposition of Cornerstone had not been determined, correct? Correct. Okay, so and everybody, I'll strike that. And you're of the opinion, sir, that Cornerstone was a struggling company of questionable value, right? Correct.

Okay? And you say that the Linta creditors weren't interested in owning Cornerstone, right? Correct. That would have been a really easy thing to ask for the Cornerstone equity when no one in the capital structure seemed to want it, right? There was, Lintus certainly didn't want it, and I would recharacterize Inks position, which was they were uncertain. Okay. So you could have asked for this asset that people were uncertain about or didn't want, but you never asked for that to give that to the preferred shareholders, did you? I didn't ask, that's correct. I did not ask for that asset because of the magnitude of the investment that it would have taken. taken in order to continue its operations.

Okay. And that's because you had already decided to give away, or sorry, that's because you'd already decided to transfer the company's cash as part of the settlement, right? With the $200 million of cash, there would have been enough funding for Cornerstone. Isn't that right? There is, I don't know that to be true. You don't know one way or the other. I do not know one way or the other. I will say that the cornerstone future was certainly dependent on outside funding besides any kind of equity contribution from Topko. And it was certainly very much in need of a tariff refund. And it was certainly very much in need of a continued relationship. with ink in order to realize synergies and all the other and synergies as well as the UPS discount. So now you've seen the ever core valuation of Cornerstone, haven't you?

I have. Okay. And you see that it has tens of millions, maybe $100 million of value, right? I've seen their view. Right. And that's the only valuation you've ever seen, right? other than the liquidation analysis. Right.

So are you aware, oh, actually, let me back on. So I want to talk about the length of this meeting. So the meeting, as we understand it, was supposed to be on the 23rd and 24th, but there was some kind of a snowstorm on the 23rd, so it was only held on the 24th, right? Well, there was a Zoom meeting held on the 23rd as well. Okay. But the settlement meeting where the deal was struck was in person at Kirkland's office, right? The framework.

Framework. That framework included this $400 million claim, right? Correct. Okay. And that meeting took two and a half to four hours, as you recollected, right? Half a day. It was a full afternoon. Okay.

So you gave up, you gave this $400 million claim in the context of a meeting spanning half a day at the offices of Kirkland and Ellis, right? Again, without fentany. about you there were many conversations in advance of this meeting that took place where the $400 million allowable claim was discussed if you're saying were we in the same room discussing the framework for four and a half hours at Kirkland and Ellis the answer is yes okay was it the only discussion no all right but let's focus on the preferred shareholders recovery, there weren't that many iterative proposals on the preferred shareholders recovery. Were there? No. There was zero and 100 on their side, 100% recovery on

their side, and then you offered 25 million, and then we went back to zero, right? Correct. So do you have a general understanding that we're here to consider the standard of approval under bankruptcy rule 1919 for this intercompany settlement? Not as an expert. You have a general understanding? Yes. Okay. So let's talk about the probability of success.

Now, before you agreed to the $400 million claim amount, you did not come to a view at the probability that QVC Inc. would prevail on the intercompany litigation, did you? I did not come to a view any more than I came to a view as to whether we succeeded defending it. What I did come to a view on was that it was extremely clear that they were bringing these claims. Okay. And you saw earlier that even the QVC Inc. Disinterest of Directors believed that the evidence of insolvency was mixed, right? Yes.

Okay. Now, in terms of the probability of success, isn't it fair to say that your settlement assigns a 0% probability of success on defending these intercompany claims? Isn't that the case? First of all, I'm not in the business of evaluating percentages of success. They're in the eye of the beholder. We believe that the $400 million was a reasonable discount over a billion dollar claim, and it was an important part of the framework for its settlement. Okay. But in terms, are you able to tell the court, as you sit here today, whether the $400 million represents a 0% probability of success, a 50% probability success, 100, any number in terms of the probability of success on the merits?

And as I said to you a minute ago, I believe that I am not in a position to judge the outcome of a highly contested, very extended litigation with dueling experts and the overall cost to the enterprise. I'm not in a – I don't do that for a living, Mr. Glenn, so I am not in a position to make that determination. Right, but doesn't this settlement give away all of the assets to settle the claim asserted by QVC, Inc? All of it. First, we... Yes or no. No. First, we did not give away any of the assets.

What we did was we negotiated terms that we thought were important in the overall settlement that protected Topgo, from contractual terms that protected the preferred, the broadly based preferred holders, that is, the more public holders, from any kind of clawback claim. We protected people against any kind of tax indemnity. We took ourselves out of the, we took ourselves out of the responsibility

for being the parent filer, and therefore the likely entity of first resort for the IRS. Because remember, not only is there the claims analysis, but there is also the IRS vertical, and we have no visibility as to how and when they may bring a claim like that. So from my point of view, giveaway is a pretty harsh term. It was part of a overall negotiation. Okay. But that transfer, that settlement, is no different than a 100% victory from either the IRS or this intercompany claim, isn't it? In a litigation.

I don't know what a litigation will show. You're asking me to project what a litigation will show, and I don't know. Okay. You would agree with me, Mr. Meltzer, that there's at least a possibility, some possibility that QVC Group would have prevailed in this litigation. Isn't that right? It's a possibility. I also agree that there's a possibility that QVC Inc would have materially prevailed in the litigation.

Okay. But let's focus on QVC Group. QVC group had some possibility of prevailing in this litigation, correct? Yes. This litigation, this settlement that you have proposed to the court leaves no possibility, recognizes no possibility, the QVC group ultimately would have prevailed. Yes or no?

Correct. Now, let's talk about the cost of litigation. I believe you testified about this earlier. never got an estimate of the cost of this litigation to litigate for either QVC Group or QVC Inc. Right? Correct. Okay. And in fact, the company had this $200 million war chest, correct?

I think Warchest is an overstatement. They have $200 million of available cash. Right? Which could have been used for the litigation defense. In part, yes. Okay. And you never used the cost of litigation either to QVCVCHA. or to QVC Inc. in these negotiations, did you?

No. And you never made the argument that if QVC Inc. ultimately litigated this case, that they would have had to spend money and their net recovery would have been lower than the intercompany claim that you've agreed to, did you? As I've said to you before, I did not stand in the head of Mr. Caglovak for Ms. Frisley as to what their analysis was of what their likely return would be as to the continued not only prevailing, but to continue moving forward with any of that litigation. I did not do that. Okay. Now, you were asked by Mr. Cobre whether you ever made the threat to just litigate the case

rather than to settle it. Do you recall being asked that question? whether we ever made the threat or we ever considered it. Either. Let's break that down. Did you consider it? Objection. Oh, which are the question.

Oh, which are the question. Sorry. Okay. So you never made that threat to Mr. Kegovic, did you? That's correct. Okay. And you testified in response to Mr. Kobra's question that you at least considered it. Isn't that the case?

Yes. And that's what you're telling Judge Perez today, correct? We considered it. Okay. So let's go to your deposition at page 113, line 11. 13. So at your deposition, I asked you these questions and did you give these answers here? Why don't I just look at it up there?

On the screen? Yep, 113. Did you consider just litigating the claims and not settling? Objection and your caution not to give privileged information and it says answer, unfortunately, I don't think I can go further than I have already answered. It is based on counsel's advice now and at the time. So at your deposition, you refuse to answer that question on the basis that this was privileged, but now you're telling Judge Perez that you did consider it, right?

Excuse me? Yes. You were asking. The question is, did he refuse? I think actually ultimately, there actually is dialogue on that. Okay, let's move on. So let's talk about the views of QVCG stakeholders on the settlement. You never engaged during this process to get the information.

about who the QVCG creditors were, right? QVCG creditors. QVCG creditors? Correct. QVCG creditors. You try to find out who the QVCG creditors were. QVCG, other than the unsecured creditors, had no debt. Right.

So you never asked to talk to the unsecured creditors to get their view about this settlement, did you? No. Okay. And you never engaged before the time you entered into the time you entered into the, the settlement with any preferred shareholder of the company, did you? Well, as I testified before, when we got the Cleary letter, there was – you may not say that there was much engagement, but there was some engagement with the Cleary firm.

By Kirkland. By Kirkland. Not by you. As reported to us by Kirkland. But I just want this to be a clear record. You and Mr. Meltzer never engaged with any preferred shareholder before you agreed to the settlement, did you? That's correct. Okay.

And let's go back to this letter, PX159. So I think you testified in response to questions from Mr. Cobre that you read every word in this or every sentence in this letter, didn't you? Yes. Okay? And you say in response to the second page, the statement on the second page, quote, if the board would like to discuss these matter further, our clients are willing to engage in a constructive dialogue.

Do you see that? I do. Okay. And so you understood that Mr. Brody was asking you if you wanted to engage, he was open to talking to you and his client was too, right? Correct. Okay. And you did not respond to that request, did you? We respond, you may not like the response, but the way we responded to it was that we instructed Kirkland and Ellis, who was also debtors counsel, to engage with Mr. Brody, to find out exactly what his position was and who he represented and whether we should

potentially reconsider having a meeting with him. Okay, so you're representing QVC group, right? That's your only client in this case, QVC group, right? QVC grouping, I'm a member of the special committee, that's correct. Right. And so the performance, the preferred shareholders are a stakeholder of QVC Grope, correct? Correct. Okay.

And so if you wanted to reach out to him, you, Mr. Meltzer, and your counsel, you could have, right? We could have. And you didn't do that? We did not. Okay. Now, you told Mr. Cobran in response to his question that Mr. Brody's client, you understood, only had one to two percent of the preferred shareholders, right? That was reported to us, correct.

Okay. And so if you wanted to know what the preferred shareholders' view was of this settlement, you could have reached out to them, couldn't you? Yes. Okay. And in agreeing to a settlement that's going to determine the disposition of stakeholder recoveries isn't an important business judgment consideration to get stakeholder views? It's important to exercise your business judgment as you see it to the extent that someone who is asking a question of you has a material interest that may change your business judgment.

Okay. And are you telling the court in this case that someone with a one to two percent interest in the preferred is not material enough for you to engage with them? I'm saying it's at the margin. Okay. Recognizing that it's at the margin, you did not engage with Mr. Brody, did you? It's correct. And you could have instructed your counsel to go to Mr. Brody to say, one to two percent isn't enough, go find other stakeholders, organize, and then we'll have a conversation, correct?

With all due respect, I think that's what was done. You did not do that. We did not do that, but we directed Kirkland and Ellis to do that. To tell Mr. Brody that we should find other people. I don't want to talk over you. I'm sorry. Your testimony is that you told Kirkland to talk to Mr. Brody and see if he could find additional stakeholders that owned the preferred shares,

and then you'd have a conversation with them? We told Mr. We told Kirkland and Ellis to continue of, evaluating the number of shares or the extent of the ownership that Mr. Brody represented in the context of potentially beginning a dialogue with them. Okay. Let's go to your deposition, please. Let's go to page 126, line 21. The question is, were you asked these questions and did you give these answers?

Did you instruct your counsel to reach out to them to discuss their letter? I do not recall actually discussing. We obviously discussed the letter. And then you continue below. I'm going to be very careful about answering this question. We received the letter. I wouldn't say that there was a minimal or material delay, and we discussed it with counsel, and we reached the conclusion that on the basis of the factual predicates in the letter,

there was no reason to immediately engage. were you asked those questions and did you give those answers? Yes. And now we're in a Chapter 11 case, right? And now the preferred shareholders have organized, have they not? Yes. And we represent, in your testimony, approximately 30% of the preferred shareholders, right? Correct.

Okay. That's the material amount of the preferred shareholders, right? That is a large percent. Had we shown up during these negotiations, you clearly would have believed that that was material enough to engage with us, right? Yes. Okay. And we have told you clearly and unequivocally that we don't like this settlement, right?

Correct. Okay? And no other preferred shareholder has shown up in this court to support the settlement you believe is so appropriate, right? And I believe that no other preferred shareholder is shown up to object either. Correct. But of all the people who've shown up, all of them object to the settlement, right? settlement, right? The group that you represent, you and Cleary represent, have shown up and have

objected. And our clients are the ones that have money on the line in the settlement, not you, sir, right? You. Objection. Your clients. Wait, wait, hold on. Sorry. Let's give attention. I'll withdraw the objection. Okay. Your clients, as I understand it, have acquired. their interest post the petition date they do not believe and if I'm putting words in your mouth you should correct me they do not believe that the releases are valuable to them because they have not received any of the dividends and they

are and we believed in connection with our fiduciary responsibilities to all the stakeholders to reduce the level of potential liability on the claims, to try to resolve all of the tax issues, to give all preferred holders releases, and to put ourselves in a position where the company and to find in the context of the trust. transfer of our interest in Cornerstone as well as the 30, I guess, 38% of Cornerstone that Linta owns to find a way for Cornerstone to continue to be a viable operating entity. So let's talk about this release. So you believe this release is valuable to prefer shareholders right I do okay and you agreed to this transaction in the late February

early March timeframe correct the settlement the settlement yes well it was yeah again I'm not fencing with you but I think it was really ongoing to almost right before the petition date that's a fair that's a fair response so let's go back to the time you were negotiating the settlement so at that time you did not know what the universe of preferred shareholders existing at that time actually received the dividends that are subject to this release did you I did not but I knew that potentially people who had received dividends and based on again I don't want to in any way blow privilege here the question of transatlantic

for re-liability was discussed. Okay. So, but do you understand that the people who got the cash, the recipients of the dividends, are the targets of this litigation, right? Yes, okay? And as you sit here today, you have no idea that when you negotiate the settlement, what proportion of the preferred shareholders were in the class that got the dividend versus the ones that bought it after and did not, right?

That is correct. So the stakeholders that you represented, the existing stakeholders, during these negotiations, you had no idea what percentage of those existing preferred shareholders would in fact benefit from this release, right? All I knew was that it was a widely distributed issue of preferred stock in which those preferred holders received $450 million, and that there was a, I don't want to characterize it, but we believe, that the releases had value to protect those holders.

Okay. So it made no difference to you whether someone got a preferred dividend two years ago and sold their shares versus someone who owned the shares at that time and who would not benefit from the release. That distinction didn't matter to you. I'm not sure. Are you talking about post-petition, pre-petition? When you negotiated the settlement.

When we negotiated the settlement, we were looking towards a widely, as I said a minute ago, a widely distributed issue of preferred stock, which had over a period of time gotten $450 million. Who could, I'm not necessarily saying that you're wrong, but who could be subject to clawback claims. Okay. So you understand, though, that someone who bought the preferred shares after one of those dividends, even two or three years ago, is not going to benefit from this release, right? Again, I think the issue is, and lawyers can differ on this subject, is I do not, as a disinterest director right now, have a firm understanding or a firm belief as to what the likely – what transfer reliability may be – may be directed at those people who – yes, maybe not have gotten dividends, but bought it from people who got dividends. Do you know what? Maybe we have a 10-minute break now.

Thank you. All right, let's come back at 5.15. 9 minutes.