QVC Group, Inc.
INTRODUCTION
This Court has been asked to confirm the Debtors’ joint prepackaged plan of reorganization. The plan is premised on a restructuring support agreement which contains a comprehensive intercompany settlement. The Debtors have a complicated corporate history. Over the last few years, they engaged in, among other things, several intercompany transactions which potentially precipitated various intercompany claims between themselves. The Debtors appointed disinterested fiduciaries to investigate these claims and, if appropriate, to negotiate on behalf of their respective stakeholders, an intercompany settlement. The settlement these disinterested fiduciaries ultimately achieved seeks to resolve all claims in order to achieve a global resolution, preserving—if not maximizing—value for the Debtors’ estates, setting up the company for a successful reorganization, paying all third-party general unsecured claims in full, and putting the go-forward operating entity on the path towards long term success. The Debtors ask the Court to approve this settlement and confirm the plan over the objection of a vocal minority of equity holders who feel the process of negotiating the settlement was unfair, it subjects them to disfavorable terms in exchange for little, if any, benefit, and that the plan violates manifold provisions of the
It is on the basis of this extensive factual record that the Court makes these Findings of Fact and Conclusions of Law pursuant to Federal Bankruptcy Rules 7052 and 9014. To the extent any Finding of Fact is construed as a Conclusion of Law, it is adopted as such. Moreover, to the extent any Conclusion of Law is construed as a Finding of Fact, it is adopted as such. The Court reserves its right to make additional Findings of Fact and Conclusions of Law as it deems appropriate or as may be requested by any of the parties.
FINDINGS OF FACT
I. RELEVANT PREPETITION HISTORY.
A. The Debtors’ Prepetition Corporate and Capital Structure.
1. QVC Group, Inc. (“QVCG“) and its debtor affiliates (collectively, the “Debtors“) comprise one of the world‘s largest
2. The Debtors’ prepetition corporate structure can be generally understood with respect to four key entities: (i) QVCG, (ii) Liberty Interactive, LLC (“LINTA“), (iii) QVC, Inc. (“QVC“), and (iv) Cornerstone Brands, Inc. (“CBI“) (together with QVCG, LINTA, and QVC, the “Key Entities“).5 Put simply, QVCG sat at the top of the company and had 100% ownership of LINTA.6 LINTA owned 100% of Qurate Retail Group, Inc. (“QRGI“), which in turn owned 100% of QVC, which in turn owned various operating foreign and domestic
3. The Debtors’ prepetition capital structure is massive and complex, as a result of historical liability management transactions, historical mergers and acquisitions, internal and external reorganizations, dividends, intercompany notes, and shared service and tax sharing agreements.10 As of the Petition Date the Debtors had approximately $6.53 billion in total outstanding funded debt obligations—primarily under LINTA and QVC—as well as preferred equity interests with a liquidation preference of approximately $1.272 billion in at the QVCG level.11 The Debtors’ outstanding funded indebtedness exists in three categories, each important for purposes of the Debtors’ restructuring efforts and reorganization Plan.12
4. The first category is approximately $1.48 billion of funded debt obligations, comprised of various notes (the “LINTA Exchangeable Notes“) issued pursuant to that certain Indenture dated as of July 7, 1999 (as amended, restated, amended and restated, supplemented,
5. The second category is approximately $2.9 billion of funded debt obligations under the currently operative Fifth Amendment and Restatement Agreement by and among QVC, and QVC Global Corporate Holdings, LLC (“QVC Global“) as borrowers, QRGI as subsidiary guarantor, the lenders from time to time party thereto, JPMorgan Chase Bank, N.A. as administrative and collateral agent and related ancillary documents, which collectively provide revolving commitments and extensions of credit (the “Revolving Credit Facility” or “RCF“).15 As part of a 2021 refinancing of the RCF the RCF Lenders received pledges of security interests in the equity and proceeds from the equity (other than distributions made in compliance with the RCF restricted payment covenants) of Cornerstone in addition to the security interests they already held in the equity and proceeds from equity for QVC and Zulily, LLC (“Zulily“), under the prior RCF agreement.16
6. The third category is approximately $2.15 billion of funded debt obligations, comprised of various senior secured notes (the “QVC Inc. Notes“) issued pursuant to various note indentures.17 The QVC Inc. Notes are secured equally and ratably by the same collateral as the RCF—the equity of QVC.18
7. Neither QVCG nor CBI had funded debt obligations prepetition.19 QVCG also had outstanding Series A voting common
B. Relevant Prepetition Initiatives.
8. In the lead-up to the filing of these chapter 11 cases, the Debtors were becoming increasingly distressed as a company—a fact which cannot be ignored. In recent years, the Debtors faced a confluence of headwinds that strained their financial performance, including eroding cash flows as a result of an increasing number of customers canceling their TV and cable services (“cord cutting“), record inflation, supply chain disruptions during the COVID era, elevated labor costs, uncertainty caused by the United States’ recent tariff policies, and a December 2021 fire at the Rocky Mount distribution center which caused the Debtors to lose more than 1 million customers and more than $500 million in revenue due to compromised product and service ability.21 The Debtors reacted to these headwinds through a number of strategic, financing, and governance initiatives over the course of several years.22
9. Between 2020 and 2025, the Debtors engaged in a number of liability management transactions and debt paydowns to reduce funded debt, borrowing costs, administrative costs and tax burdens, and to manage cash levels throughout their capital structure, described more fully in Part II.A.(1).23
10. In June of 2022, the Debtors announced the beginning of a multi-year turnaround plan consisting of two phases: first, Project Athens,24 and second, the WIN Growth Strategy.25
12. During the second quarter of 2023, the Debtors began ongoing dialogue with Evercore Group L.L.C. (“Evercore“) regarding capital structure considerations.27 The Debtors also engaged Kirkland & Ellis (“Kirkland“) in April 2025, and AlixPartners in May 2025, as they continued to contemplate and undergo prepetition restructuring efforts.28
13. The Debtors’ boards and senior management also proactively evaluated the Debtors’ corporate governance structure, ultimately recognizing the Key Entities had discrete capital structures and were parties to the aforementioned historical intercompany transactions which may have given rise to potential intercompany claims.29
14. In order to ensure each Key Entity had independent and qualified fiduciaries to advocate for each of their respective interests and the interests of their stakeholders, and to address potential conflicts under the Debtors’ then-existing governance structure, the Debtor implemented a number of governance changes and amendments at various Key Entity levels during September of 2025.30 These governance efforts ultimately resulted in: (i) the establishment of an independent board of directors at the QVC level, to which Paul Keglevic and Jilly Frizzley were appointed as initial members, then as the sole disinterested board members; (ii) the establishment of an independent board of managers at the LINTA level, to which Eugene Davis and Thomas Walper were appointed as initial members, then as the sole disinterested board members; and (iii) the appointment of disinterested
15. Special Committees were formed at the QVCG and CBI levels (each such special committee, a “Special Committee“). Each Special Committee was granted authority consisting of: (i) the exclusive authority to investigate, review, discuss, consider, negotiate, approve, authorize, reject, and act upon any matters in which a conflict exists or is reasonably likely to exist between such entity and any of its stakeholders, including its affiliates and subsidiaries, (each such matter, a “Conflict Matter“), and (ii) the authority to evaluate, review, consider, negotiate, and authorize entry into a transaction, subject to further board approval to the extent such transactions did not constitute a Conflicts Matter.32
16. The QVC and LINTA boards, each comprised solely of Disinterested Directors, and the QVCG and CBI Special Committees (each such governing body, a “Governing Body“) each engaged separate counsel with respect to Conflicts Matters: the QVCG Governing Body retained Kobre & Kim, LLP (“Kobre“); the LINTA Governing Body retained Milbank LLP33; the QVC Governing Body retained Katten Muchin Rosenman LLP (“Katten“); and the CBI Governing Body retained Seward & Kissel LLP (“S&K“).34
II. THE INTERCOMPANY SETTLEMENT.
A. The Disinterested Directors’ Investigation.
18. The Court finds the Disinterested Directors engaged in a fulsome and comprehensive assessment of potential claims and defenses arising out of the historical intercompany transactions during the course of their independent investigations.37 The facts of this case demonstrate that throughout the investigation process, the Disinterested Directors at each Key Entity were acting separately and independently of one another, with and through each‘s respective counsel, and that they relied on broad but detailed sets of information from the Debtor entities, shared advisors’ forensic analyses, and their respective counsel‘s legal
19. The Disinterested Directors began with an initial diligence period, issuing numerous formal document and information requests from various Debtor entities seeking inter alia board materials and minutes, corporate governance documents, relevant transaction documents, financial and accounting information, and related correspondence.39 Kirkland, AlixPartners, and Evercore (the “Joint Debtor Advisors“) supported the Disinterested Directors’ diligence, information collection efforts, and investigations by serving as intermediaries between the four Governing Bodies and management.40 The Joint Advisors provided facts to all Governing Bodies at the direction of the Debtors’ management team to aid efficiency.41 On November 11, 2025, Kirkland provided each Disinterested Director and their counsel with a presentation of the relevant intercompany transactions that took place between 2020 and 2025 that might give rise to potential intercompany claims and defenses, as part of the Disinterested Directors’ initial diligence of the company.42
20. After the initial diligence period and the November 11, 2025 Kirkland presentation, the Joint Debtor Advisors began facilitating direct collection of documents on behalf of, and at the request of each Disinterested Director.43 The Debtors retained AlixPartners to serve as e-discovery vendor in order to facilitate each Disinterested Directors’ investigation.44 In December 2025 and January 2026,
21. Through their independent efforts across both the diligence and investigation period, the Governing Bodies collectively reviewed and analyzed tens of thousands of documents related to the historical intercompany transactions produced from various Debtor entities in addition to Liberty Media Corporation (“LMC“), in its capacity as provider of certain services to QVCG pursuant to the Intercompany Services Agreement (defined below).46 The Governing Bodies also collectively participated in over 25 meetings with other Disinterested Directors with or through their separate and independent counsels.47 To analyze potential tax implications relating to the intercompany settlement, the QVCG Governing Body also retained Holtz, Slavett, Drabkin & Warner as independent tax counsel.48 Each Disinterested Directors’ counsel also had access to senior management at the company, collectively conducting 7 separate 90-minute interviews of former and current executives regarding their personal knowledge as to the historical intercompany transactions.49
22. The Disinterested Directors also relied on forensic analyses from AlixPartners and Evercore in conducting their respective investigations and assessment of potential intercompany claims and defenses.50 The AlixPartners forensic team conducted extensive funds flow and APIC-level analyses of various Key Entities’ bank records and general ledgers for the years 2019 through 2025 to help the Disinterested Directors better understand the nature and extent of any
23. Evercore provided all Disinterested Directors, through their respective counsel, a summary of indicia of insolvency using data from 2020 through 2025.54 The data used included information regarding the Debtors’ sales, OIBDA, liquidity, and the trading values of QVCG Preferred Equity and common shares during the relevant period; graphs showing the trading value and yields on QVC and LINTA notes; and a table showing the trading value and yield of QVC notes alongside the dates and amounts of historic distributions from QVC and the amounts of those historic distributions to QVCG.55 Evercore also provided the Disinterested Directors with an enterprise valuation of CBI to help them better understand its status and how a transfer of that entity would weigh against various considerations the Key Entities might provide or receive under a potential intercompany settlement.56
24. Through their collective diligence and investigative efforts, the Disinterested Directors arrived at the following understanding of the relevant prepetition transactions and potential intercompany claims and defenses arising thereunder:
(a) The 2020 Restructuring.
25. In December 2022, the Debtors executed a multi-jurisdiction, 15-step restructuring to increase tax efficiency, optimize capital deployment, and reduce administrative cost (the “2020 Restructuring“).57
26. As part of the 2020 Restructuring, the Debtors retired certain intercompany notes, reducing currency exchange risk, and eliminated defunct subsidiaries, reducing governance and compliance costs.58 The 2020 Restructuring also facilitated future tax savings for the Debtors’ consolidated tax group on the retirement of certain 3.5% participating hybrid option note securities due in 2031 issued by LINTA (the “MSI Exchangeables“), which had accrued a substantial deferred tax liability.59 To accomplish the retirement of the MSI Exchangeables and achieve this tax efficiency for the Debtors’ consolidated tax group, LINTA and the newly created subsidiary QVC Global, established under QVC, entered into a series of agreements, including (i) the Nineteenth Supplemental Indenture, which made QVC Global co-obligor on the MSI Exchangeables; (ii) a payment reimbursement agreement, whereby QVC Global agreed to reimburse LINTA for any payments LINTA made on the MSI Exchangeables; and (iii) a promissory note from LINTA to QVC Global, reflecting a face amount of $1.825 billion (the “LINTA Promissory Note“), which approximately matched the “adjusted issue price“—or outstanding amount, as determined for tax purposes—of the MSI Exchangeables at the time of the transaction.60
27. At the time LINTA issued the LINTA Promissory Note in 2020, there was $218 million in principal outstanding on the MSI
28. On December 31, 2021, LINTA repaid $85 million of the initial $1.825 billion face amount of the LINTA Promissory Note.66 There were no additional payments to reduce the principal amount of the note. The LINTA Promissory Note accrues interest at 0.48% annually and LINTA has made the following interest payments: $8.8 million on December 29, 2021; $8.5 million on December 29, 2022; $8.5 million on December 29, 2023; $8.5 million on December 29, 2024; and $8.4 million on January 8, 2026. As of the Petition Date, the balance on the LINTA Promissory Note was $1.74 billion.67
29. At the end of 2022, the Debtors executed a series of transactions to optimize cash allocation across their structure and increase balance sheet flexibility (the “2022 Cash Management Plan“).68
30. The 2022 Cash Management Plan had two components. First, the Debtors prepared Zulily for sale, which required removing it from the RCF.69 On December 14, 2022, the Debtors accomplished this in several steps: (i) CBI drew $300 million under the RCF70; (ii) CBI paid that amount to QVCG in exchange for a promissory note for the same amount71; (iii) QVCG contributed the $300 million to Zulily72; and (iv) Zulily used approximately $277.204 million of that amount to pay down its borrowings, and retained the remaining $22.795 million on its balance sheet.73 QVC then drew $300 million from the RCF and paid it to QVCG as a dividend, which in turn used that amount (plus interest) to pay off the CBI promissory note.74 CBI then repaid its $300 million borrowing under the RCF (collectively, the “December 14 Transfers“).75
31. Second, the Debtors executed a series of transactions from December 21 through December 29, 2022, to allocate cash across the
32. On December 19, 2022 (before the December 21 Transfers, but after the December 14 Transfers), Kroll LLC issued a solvency presentation and opinion formulated by Duff & Phelps to the QVCG board (the “2022 Duff & Phelps Solvency Opinion“).80 Duff & Phelps concluded that after QVC‘s $600 million draw on the RCF, and giving effect to the anticipated dividend of $800 million up to QVCG through the December 21 Transfers: (i) the fair value of QVC‘s assets would exceed QVC‘s debt; (ii) QVC should be able to pay its debts as they became due; and (iii) QVC would not have an unreasonably small amount of capital for its businesses.81 Duff & Phelps also concluded that after LINTA received the $301 million distribution and QVCG received the $499 million distribution (reflecting the ultimate allocations in the Key Entities’ respective bank accounts following the December 21 Transfers): (i) the fair value of LINTA‘s assets would
(c) Post-2022 Cash Management Plan Intercompany Dividends.
33. After the 2022 Cash Management Plan, QVC continued to pay dividends to QVCG and LINTA for debt service and tax obligations under that certain Tax Liability Allocation and Indemnification Agreement, dated as of April 26, 2004, by and between LMC and QVC, for and on behalf of itself and each subsidiary of QVCG (the “QVC TSA“).83 During this period of time the QVC Notes Indenture Credit Group had a Consolidated Leverage Ratio exceeding 3.50x, meaning the restrictive covenants under the QVC Notes Indentures prohibited dividends other than dividends to make debt principal and interest payments or payments under the QVC TSA.84 Regardless, between January 2023 and February 2025, QVC paid an aggregate of approximately $586.7 million in dividends (the “Post-2022 QVC Dividends“), comprised of approximately $343.8 million transferred to QVCG and approximately $242.8 million transferred to LINTA.85 While the Debtors may have a series of written consents showing QVC paid these dividends to its direct parent QRGI, bank account statements and
(d) 2024 Capital Contribution & Exchange.
34. In September 2024, QVC exchanged 89% of its 2027 and 2028 Notes—then worth $959 million—for $605 million of newly issued 2029 Notes and $352 million of cash (the “2024 Capital Contribution and Exchange“) in order to facilitate a potential extension under the RCF.88 The $352 million of cash was comprised of $75 million of cash on hand at QVC and $277 million from a LINTA capital contribution to QVC.89
(e) Payments Under the Intercompany Tax Sharing Agreements.
35. QVCG files consolidated federal income tax returns (and corresponding relevant state and local tax returns) on behalf of itself and certain of its affiliated direct and indirect subsidiaries which are treated as corporations for income tax purposes, such as QVC and CBI (together, the “Q Consolidated Group“). As such, QVC, CBI, and other “members” of the Q Consolidated Group have joint and several liability for the income tax liability of the entire Q Consolidated Group.90 LINTA
36. In order to provide for the payment and sharing of tax liabilities among the Q Consolidated Group, its members entered into two different tax sharing agreements. The primary tax sharing agreement—the QVC TSA—allocates liability as between QVCG and LINTA on the one hand, and QVC and its subsidiaries on the other.93 The QVC TSA generally provides that QVC will pay to QVCG an amount equal to QVC‘s and its subsidiaries’ separately calculated tax liability without regard to any amount of available tax attributes that might be available at the Q Consolidated Group level and generated by entities other than QVC and its subsidiaries.94 Additionally, the QVC TSA includes reciprocal indemnification obligations for the “QVC Group” (defined as QVC and its subsidiaries) and the “QVCG Group” (defined as all entities owned by QVCG other than the QVC Group).95
37. The QVC TSA is generally favorable to QVCG. For example, the QVC TSA generally required that QVC make payments to QVCG that exceeded even QVC‘s own “standalone” tax liability if that
38. Consistent with these contractual requirements, QVC made substantial payments to QVCG, as applicable, under the QVC TSA.101 Such amounts were ultimately in excess of that needed to be paid to the IRS, both because QVCG had tax attributes available to reduce the overall amount payable, and because those same attributes precluded, in certain years, the Q Consolidated Group from utilizing certain tax credits QVC could have utilized on a standalone basis.102
39. The QVC TSA also includes indemnification provisions which protect QVC from bearing tax liability on account of taxable income and tax liabilities generated by members of the Q Consolidated Group other than QVC and its subsidiaries (again, the “QVC Group” compared to the “QVCG Group“).106 In particular, under § 10(a) of the QVC TSA, the members of the “QVCG Group” agreed to indemnify and hold harmless QVC from and against, inter alia, “any Taxes for which such member of the [QVCG] Group is required to pay any Governmental Authority (except for Taxes which [QVCG] has a right to reimbursement from QVC) . . . .”107 Any tax liability that arises as a result of activities or items arising at QVCG, LINTA, Cornerstone, or any entity not a member of the “QVCG Group” as defined under the QVC TSA would be covered by this indemnity.108 This would include any tax liability associated with the prospective discharge of certain LINTA Exchangeable Notes contemplated under the Plan (commonly referred to throughout these chapter 11 Cases as the “Deferred Tax Liability” or “DTL“), as that liability would be Taxes (as defined under the QVC TSA) of the “[QVCG] Group” that are neither Taxes of the QVC Group, nor reimbursable by QVC under the QVC TSA.109 The DTL, in simple terms,
payments is a litigable issue, and the treatment of such excess payments remains unclear.
(f) Payments Under the Intercompany SSA.
40. In November 2018, QVC, HSN Inc. (“HSN“) and Zulily entered into the Affiliate Company Shared Services Agreement, dated November 14, 2018 (as amended by the Joinder and Amendment, dated October 8, 2019, the “Intercompany SSA“).111 At the time, HSN was a QVCG subsidiary and parent to CBI.112 On December 31, 2018, QVCG transferred its ownership interest in HSN, excluding HSN subsidiary CBI, to QVC through a transaction among entities under common control.113 As a result, HSN became a subsidiary of QVC while CBI remained a subsidiary of QVCG.114 In October 2019, CBI was joined as a party to the Intercompany SSA with QVC, HSN, and Zulily.115 On May 24, 2023, the Intercompany SSA terminated as to Zulily upon its divestiture by the Debtors.116 Current parties to the Intercompany SSA
41. Under the Intercompany SSA, participating parties may act as a service provider or service recipient of certain business operations and administrative services set forth in the agreement or any other services mutually agreed upon, subject to certain exceptions.118 The cost of services provided under the Intercompany SSA is determined as the proportionate part of the compensation and benefits paid to service provider personnel, plus an allocation of related overhead costs, and is paid on a monthly basis.119 For services provided by third-party vendors, service recipients pay fees and expenses at cost, without markup, which are due within 45 days of the service recipient‘s receipt of a monthly detailed and itemized invoice from the service provider.120
42. All parties to the Intercompany SSA have historically paid costs incurred in-full on a monthly basis.121 Among other services, QVC and CBI (and before its divestiture, Zulily) exchanged invoices for expenses relating to personnel and business advisory services.122 In sum, Zulily has paid QVC $2.16 million, $2.69 million, $2.59 million, and $2.79 million for management-related expenses incurred in 2019, 2020, 2021, and 2022, respectively. CBI has paid to QVC $1.69 million, $1.5 million, $1.29 million, $3.1 million, $3.39 million, $3.53 million, and $2.1 million for management-related expenses incurred in 2019, 2020, 2021, 2022, 2023, 2024, and 2025, respectively.123
(g) CBI Removal from the RCF.
43. On April 1, 2025, QVC notified the RCF Lender Group of its election to remove CBI as a borrower under the RCF.124 Pursuant to
(h) QVCG Preferred Dividends.
44. The Preferred Shareholders’ rights are governed by that certain Certificate of Designations (the “COD“) adopted by the board of QVCG on August 20, 2020, in advance of the original QVCG Preferred Equity issuance.128 Pursuant to the COD, Preferred Shareholders are “entitled to receive, when, and as if declared by the [QVCG] Board of Directors, out of funds legally available therefore, preferential dividends that shall accrue and cumulate” at a rate of 8.0% per annum (unless a triggering event escalates the applicable rate).129 QVCG‘s failure to pay results inter alia in an increased liquidation price of the QVCG Preferred Equity.130 Upon liquidation, Preferred Shareholders “receive [the liquidation preference] from the assets of” QVCG “[s]ubject to the prior payment in full of any Debt Instrument and other liabilities owed to the Corporation‘s creditors” and any senior class of equity.131 QVCG paid quarterly dividends to the Preferred Shareholders until May 23, 2025 (such dividends, the “QVCG Preferred Dividends“), when it suspended the QVCG Preferred Dividends.132
46. Beginning in Q4 2022, QVCG‘s board obtained a solvency opinion from Duff & Phelps prior to issuing each QVCG Preferred Dividend.135 In each opinion, Duff & Phelps concluded that after each QVCG Preferred Dividend: (i) immediately prior to giving effect to the proposed dividend, the surplus of QVCG exceeded the amount of the proposed dividend and (ii) after giving effect to the consummation of the proposed dividend, (a) the assets of QVCG exceeded its debts, (b) QVCG should be able to pay its debts, and (c) QVCG would not have an unreasonably small capital for the business in which it is engaged.136
(2) Potential Intercompany Claims.
(a) Avoidance Claims.
48. With respect to the 2020 Restructuring, the Court finds each of the Disinterested Directors concluded through their investigation that the issuance of the LINTA Promissory Note as a means of financing the retirement of the MSI Exchangeables may have given rise to actual or constructive fraudulent transfer claims under
49. With respect to the 2022 Cash Management Plan and subsequent December 14 and December 21 Transfers, the Court finds each of the Disinterested Directors concluded QVC having drawn $300 million on the RCF as part of the steps taken to divest Zulily, and QVC having drawn $600 million on the RCF and subsequently sending a collective $800 million up to QVCG to be paid to QVCG and LINTA bank accounts, respectively, may have given rise to actual or constructive fraudulent transfers claims under
50. With respect to the post-2022 Cash Management Plan intercompany dividends between 2023 and 2025, the Court finds the Disinterested Directors concluded QVC having paid $343.8 million in dividends to QVCG and $242.8 million in dividends to LINTA may have given rise to actual or constructive fraudulent transfer claims under
51. With respect to the 2024 Capital Contribution and Exchange, the Court finds the Disinterested Directors concluded the $277 million capital contribution from LINTA used by QVC to exchange 89% of its 2027 and 2028 Notes may have given rise to actual or constructive fraudulent transfers under
a contested issue in any underlying litigation, based on their comparison of the metrics used in the 2022 Duff & Phelps Solvency Opinion (as well as other Duff & Phelps solvency opinions issued both at the QVCG and QVC levels for other transactions), the Evercore insolvency analysis, and the FTI 2022 insolvency analysis. The Disinterested Directors concluded that the Duff & Phelps solvency opinions historically used by the company may or may not be reliable, given their choice of metrics, but at bottom would be subject to reliability disputes in any litigation.
52. With respect to payments under the intercompany TSAs, the Court finds the Disinterested Directors concluded QVC‘s payments to QVCG for taxes between November 2019 and 2025, totaling approximately $953.7 million, and CBI‘s payments to QVCG for taxes between 2020 and 2025, totaling approximately $80.8 million, may have given rise to actual or constructive fraudulent transfer claims under
53. With respect to payments made under the Intercompany SSA, the Court finds the Disinterested Directors concluded various parties’ payments for services by counterparties under the Intercompany SSA may have given rise to actual or constructive fraudulent transfer claims.146 As with the other potential fraudulent transfer claims, the Disinterested Directors again recognized QVC‘s solvency would be disputed in any litigation, as well as the extent the services QVC received were reasonably equivalent to value paid for them. They recognized potential issues existed as to the extent value was transferred on account of antecedent debts. They recognized the calculations of fees owed would be disputed by any parties to such litigation, and resolution of that issue and the others would be fact intensive. The Disinterested Directors also concluded various parties’ payments under the Intercompany SSA may have given rise to potential preference claims, and that potential legal and factual issues may exist as to whether such payments were made in the ordinary course of business.
54. With respect to the CBI Removal, the Court finds the Disinterested Directors concluded QVC‘s election to remove CBI as
55. With respect to the QVCG Preferred Dividends, the Court finds the Disinterested Directors concluded QVCG having paid approximately $456 million in QVCG Preferred Dividends to the Preferred Shareholders may have given rise to actual or constructive fraudulent transfer claims, assertable by QVCG against the Preferred Shareholders.148 As with each of the other potential actual fraudulent transfer claims, the Disinterested Directors believed certain statutory badges of fraud may exist. With respect to potential constructive fraudulent transfer claims, the Disinterested Directors recognized issues may exist as to whether each or any of the QVCG Preferred Dividends rendered QVCG insolvent, or whether there was an exchange of reasonably equivalent value. Indeed, the Disinterested Directors recognized the complicated and fact intensive nature of any potential constructive fraudulent transfer claim, as QVCG‘s solvency would need to be analyzed at the time each transfer was made. They believed various arguments and counterarguments may exist as to the reliability of the Duff & Phelps solvency opinions issued for the QVCG board in connection with the QVCG Preferred Dividends. They also recognized
(b) Illegal Dividends
56. Again, with respect to the QVCG Preferred Dividends, the Court finds the Disinterested Directors concluded QVCG having paid approximately $456 million in QVCG Preferred Dividends to the Preferred Shareholders may have given rise to illegal dividend claims assertable by QVCG‘s creditors against QVCG and its directors.149 The Disinterested Directors also believed QVC may be entitled to pursue such illegal dividend claims against the Preferred Shareholders in the event QVCG did not. They recognized that complicated factual issues would exist as to the extent QVCG had surplus150 at the time of each distribution, and/or the extent QVCG had net profits in the fiscal years—or preceding fiscal years—in which the dividends were declared. They also recognized potential legal issues would exist as to the extent the QVCG directors were acting in compliance with their fiduciary duty of care at the time of declaring each dividend.
(c) The Deferred Tax Liability.
57. With respect to the Deferred Tax Liability, or DTL, the Court finds the Disinterested Directors concluded there was a risk—albeit a small one—that liability to the IRS may materialize based on the Q Consolidated Group having deducted on their consolidated tax return amounts for interest paid on the LINTA Exchangeable Notes as if those notes’ interest rate was 9%, when the cash paid to bondholders by LINTA was only 4%.151 The Disinterested Directors believed the
the transactions contemplated thereby and, in the event such a challenge were successful, it could result in a material current tax liability for Reorganized QVC. It is our position that certain deferred tax liabilities recorded on our financial statements as of December 31, 2025 will not materialize into a current tax liability because of the application of certain tax rules applicable to companies under the protection of a Bankruptcy court.“).
B. Process of Negotiating the Intercompany Settlement.
58. During the course of their investigations into the potential intercompany claims, and with greater intensity between February and April of 2026, the Disinterested Directors underwent negotiations to determine whether a settlement of potential intercompany claims was achievable between the Key Entities.158 Such a settlement was eventually reached. Based on the evidence presented at the Combined Hearing, the Court finds the negotiations were arm‘s-length, that the Disinterested Directors each acted independently during the course of their respective investigations and subsequent negotiations with one another (whether negotiating directly with other Special Committee members, or negotiating by and through their respective independent counsel). All Disinterested Directors’ testimony as to the negotiation of the Intercompany Settlement was highly credible. No Disinterested Director or Special Committee member at any Key Entity capitulated
59. On February 6, 2026, the Joint Debtor Advisors circulated a status report to the QVCG Board of Directors and Compensation Committee, outlining recent updates on the ongoing development of their restructuring transaction plan.159 The February 6 status report outlined four transaction term sheets that had theretofore been exchanged between the company and certain lender constituencies, namely, certain RCF lenders, QVC Notes lenders, and LINTA Notes lenders.160 The February 6 status report showed the company and its creditor constituencies were in agreement on implementing a restructuring through a pre-packaged chapter 11 plan, but were in disagreement as to various material goalposts, such as: (i) how to pay fees and expenses associated with a chapter 11 case; (ii) recovery for RCF lenders; (iii) recovery for LINTA lenders; (iv) recovery for general unsecured creditors (“GUCs“); (v) funding for CBI; and (vi) recovery for the Preferred Shareholders.161 Specifically with respect to a recovery for the Preferred Shareholders, the Debtors’ October 17, 2025 term sheet proposed that QVCG distribute cash to the Preferred Shareholders upon the company‘s emergence from bankruptcy, in addition to a 62% stake in the equity of reorganized CBI.162 On January 26, 2026, certain RCF lenders submitted a counter term sheet, which proposed distributing no cash to the Preferred Shareholders, but contemplated granting up to a 62% stake in the reorganized CBI.163 Also on January 26, 2026, certain QVC Note lenders submitted their own counter which contemplated
60. On February 12, 2026, Kobre submitted a status update to the QVCG Special Committee on the potential impending restructuring, QVCG‘s potential exposure on the potential intercompany claims, and an overview of how QVCG‘s cash position might be affected by the bankruptcy.167 In the February 12 status update, Kobre advised the QVCG Special Committee as to their interpretation of the potential intercompany claims between the Key Entities, and advised on the “importance of a consensual resolution” of any potential intercompany claims that may exist.168 Kobre advised the QVCG Special Committee of QVCG‘s limited cash on hand (then determined to be approximately $200 million), the face value of its preferred equity (approximately $136 million), and the low amount of GUC claims against it (less than $15
62. On February 19, 2026, the QVC and QVCG Disinterested Directors held individual meetings with their respective counsel regarding the developing Intercompany Settlement and upcoming negotiations with the Special Committees.180
63. On February 22, 2026, Katten sent initial demand letters, with proposed settlement term sheets attached, to Kobre and Milbank.181 QVC proposed to LINTA (i) granting QVC a $600 million GUC claim against LINTA and (ii) granting an aggregate $66.7 million in bondholder claims against LINTA, treated as GUC claims.182 QVC proposed to QVCG (i) payment of third-party GUC claims against QVCG in full, in an amount not to exceed $15 million; (ii) granting QVC at least a $400 million allowed GUC claim against QVCG; (iii) payment of such $400 million GUC claim and other allowed claims by QVC against QVCG with all QVCG‘s available cash—after payment of QVCG‘s administrative and third-party GUC claims—and any other assets owned by QVCG, which included the equity in CBI; (iv) that QVC would fund the purchase of tax insurance and payment of any liability on the DTL with proceeds from the treatment of QVC‘s allowed claim against QVCG; and (v) no recovery for the Preferred Shareholders or common equity holders of QVCG.183 Both proposals to QVCG and LINTA included mutual releases/customary debtor releases between the Parties (except for the terms of the settlement), subject to completion of the
64. The Court finds the Disinterested Directors of QVC arrived at the $400 million allowed claim figure as the lowest acceptable amount they felt could be acceptable as fiduciaries for the company, particularly in light of the magnitude of QVC‘s potential claims against QVCG, which they believed to be in excess of $3 billion in the aggregate, and QVCG‘s limited cash, which was estimated at around $180-$200 million.185 The Court finds the Disinterested Directors of QVC did not include any distribution for the Preferred Shareholders based on their interpretation that QVC had been acting as QVCG‘s “ATM” for at least the past six years, having upstreamed approximately $4 billion of cash, and that $456 million of that money had already been paid from QVCG to the Preferred Shareholders as dividends.186 The Court finds that QVC‘s Disinterested Directors believed that a mutual release of potential claims had significant value for QVCG and the Preferred Shareholders.187
65. On February 23 and 24, 2026, the Special Committees held virtual and in-person settlement conferences where counterproposals to the initial QVC proposals were made, and the QVCG Disinterested Directors made an ask for a $25 million distribution for the Preferred
66. Regardless of this outcome, the Court finds that QVCG‘s Disinterested Directors having not insisted further on a distribution for the Preferred Shareholders at the February 23 and 24 meetings was not a capitulation to the QVC Disinterested Directors, and that the negotiations had proceeded in good faith and at arm‘s-length. All Disinterested Directors recognized that the outcome of the claims was uncertain due to the plethora of legal and factual issues within each claim.192 Based on the advice of Kobre up until that point, the QVCG Disinterested Directors understood QVCG‘s potential exposure to QVC and the magnitude of such claims.193 Indeed, the QVCG Disinterested Directors seemed to recognize that QVC had leverage over QVCG both before and during the February 23 and 24 meetings. And both the QVC and QVCG Disinterested Directors had independently developed—through thorough and complete diligence of the company provided to all Disinterested Directors through the Joint Debtor Advisors—a parallel understanding that QVC had been the ATM of QVCG for at least the past six years.194 Nonetheless, QVCG was not slated to receive “nothing”
67. The Disinterested Directors of QVC independently believed their initial February 22 term sheet was mutually beneficial, as their primary goal was a fast and final resolution of the claims.201 They were, however, prepared to litigate to finality all claims against both QVCG and the Preferred Shareholders in order to maximize returns if a settlement was not reached. The Disinterested Directors of QVCG understood this—as of the February 23 and 24 meetings—and were aware that QVC‘s Disinterested Directors were prepared to unleash their arsenal of claims in the event a resolution was not achieved.202 Accordingly, QVCG‘s Disinterested Directors having potentially failed to use QVC‘s Disinterested Directors’ “fast and final” motivation as their own leverage point would not demonstrate the negotiations were not arm‘s-length. The litigation alternative, whether done inside or outside of the company‘s bankruptcy, would be expensive and lengthy.203 And the Disinterested Directors of QVC understood that they represented the operating company which would likely have sufficient cash—or, at least, more than QVCG had—to fund subsequent litigation.204
68. Nor were the Preferred Shareholders collectively slated to receive “nothing” under the settlement after the February 23 and 24 meetings concluded. Despite a distribution now being off the table,
69. On February 25, 2026, Kobre returned a markup of the QVC/QVCG proposal to Katten, reducing QVC‘s allowed GUC claim
70. On February 26, 2026, Milbank sent Katten a counter to the QVC/LINTA proposal.211 Also on February 26, 2026, the QVC and QVCG Disinterested Directors came to an agreement in principle on the $400 million GUC claim amount, subject to overall resolution.212 At the time of this agreement, ownership and funding of CBI was still subject to negotiation.213 However, QVCG‘s Special Committee (through statements of counsel), had agreed to no distributions for the Preferred Shareholders as part of the settlement.214 Mutual releases were also agreed upon, including a release of QVCG from the DTL (through QVC‘s assumption of it) and a release for the Preferred Shareholders.215
71. On February 27, 2026, Katten circulated a proposed response, subject to client signoff, to Milbank regarding the QVC/LINTA settlement.216
72. Also on February 27, 2026, counsel from Cleary Gottlieb Steen & Hamilton LLP (“Cleary“) contacted Kirkland on behalf of certain Preferred Shareholders regarding conduct in connection with the Debtors’ restructuring negotiations.217 In the letter from Cleary, counsel advised Kirkland that the Board of QVCG owes fiduciary duties solely to QVCG and its stakeholders—not any of its subsidiaries or their creditors; that significant asset value still existed at QVCG; and that
73. On February 28, 2026, the Special Committees at QVC and LINTA arrived at an agreement on the LINTA/QVC Joint Settlement Framework.220
74. On March 1, 2026, the Special Committees at QVC and QVCG arrived at an Agreement in Principle on the QVCG/QVC settlement, with the $400 million allowed GUC claim and mutual releases, but subject to a forthcoming CBI funding analysis.
75. On March 10, 2026, Kirkland circulated a draft plan and certain creditor facing materials incorporating the Disinterested Directors’ QVCG/QVC settlement framework.221 The draft plan reflected the Agreement in Principle that as part of the QVCG/QVC
76. On March 20, 2026, Kirkland circulated a CBI Funding Analysis generated by AlixPartners to the Special Committees’ counsel.223 With respect to the ultimately agreed-on CBI transfer, the Disinterested Directors at QVC and QVCG had a parallel (but independently formulated) understanding that, based on AlixPartners’ five-year financial projection and its funding analysis, CBI‘s horizon for funding itself after the reorganization was dubious, if not bleak.224 Both sets of Disinterested Directors recognized CBI would have potential synergies with QVC as its parent,225 namely from (i) being able to participate in QVC‘s UPS Agreement; (ii) access to new employees; (iii) access to outside professional services; (iv) access to information technology and audit services; and (v) distribution of management fees.226
77. On March 30, 2026, the Joint Debtor Advisors circulated a Company Term Sheet reflecting agreements in principle among the Disinterested Directors at the Key Entities.227
79. Between April 8, 2026, and April 15, 2026, conversations between the Special Committees continued regarding CBI.229 The Debtors and certain creditors exchanged terms sheets as well as drafts of the plan and RSA incorporating potential settlements.230
80. On April 13, 2026, Katten sent a final markup of the QVCG/QVC Settlement Term Sheet.231 Under this version, QVC received 100% of QVCG‘s CBI interest, all QVCG‘s Distributable Cash, and its Remaining Assets. New cash-use covenants and a fiduciary out were also added. The next day, Kobre sent back a copy of that version with its own comments attached, subject to client review and approval.232
81. On April 14, 2026, the Special Committee of QVCG formally approved the Intercompany Settlement terms.233 Also, a final pre-filing term sheet was circulated, containing RSA termination right and cash restriction provisions.
82. On April 16, 2026, the Governing Bodies granted unanimous written consent to authorize the Debtors’ bankruptcy filing
C. Overview of the Intercompany Settlement.
83. Under the final terms of the Intercompany Settlement, QVCG got (i) a full resolution of and releases from all potential claims from QVC, including avoidance claims and tax indemnity claims, which had potential aggregate liability of in excess of $1 billion; (ii) a shift of QVCG‘s liability under the DTL (under which the aggregate liability could theoretically exceed $1 billion) to QVC, with tax insurance being funded by the proceeds of all QVC‘s allowed claims against QVCG; (iii) no obligation to bear shared post-petition administrative costs or costs associated with the Joint Debtor Advisors; (iv) guaranteed unimpairment of all third-party GUC claims, totaling approximately $15 million; and (v) releases for Preferred Shareholders on potential claims arising from the $456 million QVCG Preferred Dividends.236 In exchange, QVCG gave QVC (i) a $400 million allowed GUC claim against it and (ii) all QVCG‘s Distributable Cash which under the terms of the Plan included QVCG‘s 62% equity stake in CBI.237
84. Under the Intercompany Settlement, LINTA got (i) a resolution of and release from all potential claims from QVC, including avoidance claims, which had potential aggregate liability in excess of $2.1 billion; (ii) a recovery for Holders of Allowed LINTA Notes Claims in their pro rata share of LINTA Distributable Cash, which would include approximately $88 million of cash LINTA retained prepetition, plus an approximately $23.3 million distribution from QVC as part of settling LINTA‘s potential intercompany claims, minus certain administrative, allowed secured, and allowed GUC claims; and (iii) no obligation to bear shared post-petition administrative costs or costs
85. Under the Intercompany Settlement, CBI got (i) increased likelihood of going-concern preservation, including the increased ability to continue at least near-term operations, and a favorable set-up for business overhead and administrative costs, by virtue of being transferred to QVC and (ii) unimpairment of all claims.240
86. Under the Intercompany Settlement, QVC got (i) a resolution of and release from all potential intercompany claims from LINTA; (ii) disallowance of the LINTA Promissory Note; (iii) a $400 million GUC claim against QVCG, to be funded by all QVCG‘s Distributable Cash, comprised of approximately $195 million and QVCG‘s 62% equity stake in CBI241; (iv) a potentially shorter stay in chapter 11, reducing chances of business disruptions as the remaining operating entity under the settlement; and (v) go-forward control over consolidated tax return compliance, including the ability to make certain relevant tax elections otherwise not available under the current Q Consolidated Group scheme.242 In exchange, QVC gave (i) LINTA a release of all QVC‘s potential intercompany claims against it, totaling approximately $1.8-$2.1 billion; (ii) LINTA a distribution of $23.3 million, and permitted LINTA to keep its approximately $88 million in prepetition cash; (iii) QVCG a release of all QVC‘s potential intercompany claims against it, totaling approximately $1-3 billion (accounting for the DTL indemnity claim and potential prejudgment
III. CLASSIFICATION UNDER THE PLAN, THE NOTICING PROCESS, SOLICITATION PROCESS AND VOTING RESULTS.
87. The Plan establishes four groups of Classes corresponding to each of the four Key Entity Debtors (QVCG,245 QVC,246 LINTA,247 CBI248). In total, there are three voting Classes: two in Class B (RCF
88. On April 16, 2026, prior to commencing these chapter 11 cases, the Debtors instructed their Soliciting Agent, Kroll, to distribute, via electronic mail or mail, as applicable, Solicitation Packages containing the Disclosure Statement (including all exhibits attached thereto), the Plan, and the applicable Ballot to each member of the Voting Classes entitled to vote on the Plan as of April 13, 2026 (the “Voting Record Date“).249 Each holder of a Claim to whom a Solicitation Package was transmitted was directed in the Disclosure Statement and applicable Ballot to follow the instructions contained in the Ballot (as described in the Disclosure Statement) to complete and submit its respective Ballot to cast a vote to accept or reject the Plan.250 Each holder of a Claim was informed in the Disclosure Statement and applicable Ballot that such holder needed to submit its Ballot such that it was actually received by Kroll by May 19, 2026, at 11:59 p.m. CT (the “Voting Deadline“).251
89. On the Petition Date, each Debtor filed a voluntary petition for relief under chapter 11 of the Bankruptcy Code.252 On or around the same day, the Debtors also filed the Plan, Disclosure Statement, and Scheduling Motion, pursuant to which the Debtors sought to schedule a Combined Hearing on approval of the Disclosure Statement and Confirmation of the Plan and related objection deadlines.253 On April 17, 2026, this Court entered the Order (I) Scheduling a Combined
90. Starting on April 17, 2026, the Debtors mailed, or caused to be delivered, the Combined Hearing Notice.255 The Combined Hearing Notice informed recipients of: (i) the commencement of these Chapter 11 Cases on April 16, 2026; (ii) the scheduling of the Combined Hearing to consider approval of the Disclosure Statement and Confirmation of the Plan on May 26, 2026, at 9:00 a.m. CT256; (iii) the key terms of the Plan, including classification and treatment of Claims and Interests; (iv) key dates and information regarding approval of the Disclosure Statement, Confirmation of the Plan, and the Objection Deadline; (v) the methods by which parties may request copies of the Plan and Disclosure Statement; and (vi) the full text of the release, exculpation, and injunction provisions set forth in the Plan.257 In addition, the Debtors caused the Publication Notice to be published in the New York Times (national edition) on April 23, 2026,258 and in the New York Times (international edition) on April 27, 2026.259 The Combined Hearing Notice was also made available at no charge on the public website maintained by Kroll at: https://restructuring.ra.kroll.com/QVC.
91. Certain Holders of Claims and Interests were not solicited because such Holders are (i) unimpaired under the Plan and therefore conclusively presumed to have accepted the Plan pursuant to § 1126(f), or (ii) impaired and not entitled to receive a distribution under the Plan,
92. On May 12, 2026, the Debtors filed and served the Notice of Filing of Plan Supplement, which included then-current drafts of the following exhibits: (i) the Schedule of Retained Causes of Action; (ii) the Rejected Executory Contracts and Unexpired Lease List (reflecting no rejections); and (iii) the Restructuring Steps Plan.262 On May 19, 2026, the Debtors filed and served the Second Notice of Filing of Plan Supplement, which included certain of the ABL Facility Documents (including the executed commitment letter).263 On May 19, 2026 the Debtors filed their First Amended Chapter 11 Plan, and on June 2, 2026, filed their Second Amended Chapter 11 Plan.264 On June 12, 2026, the Debtors filed and served the Third Notice of Filing of Plan Supplement, which included certain ABL Facility Fee Letters filed under seal.265
93. The Debtors completed their solicitation on the Voting Deadline.266 The Debtors completed their tabulation of the Ballots shortly thereafter, following a complete review and audit of all received
| Classes | Accept | Reject | ||
|---|---|---|---|---|
| Number (% of Number Voting) | Amount (% of Amount Voting) | Number (% of Number Voting) | Amount (% of Amount Voting) | |
| Class B3 RCF Claims against the QVC Debtors | 17 (100%) | $3,034,444,444.40 (100%) | 0 (0%) | $0.00 (0%) |
| Class B4 QVC Notes Claims against the QVC Debtors | 1,096 (85.56%) | $1,111,733,174.46 (99.88%) | 185 (14.44%) | $1,359,558.42 (0.12%) |
| Class C3 LINTA Notes Claims against the LINTA Debtors | 865 (81.91%) | $904,963,513.00 (98.95%) | 191 (18.09%) | $9,971,200.00 (1.05%) |
V. THE PREFERRED SHAREHOLDERS’ MOTION TO TERMINATE EXCLUSIVITY AND OBJECTIONS TO CONFIRMATION.
94. Leading up to the Combined Hearing, the Debtors received six formal objections, one reservation of rights, and certain informal objections to the Disclosure Statement and Plan.268 Prior to the Combined Hearing, the Debtors resolved drafting issues raised by certain arbitration claimants,269 as well as all informal objections through modifications to the Plan and agreed language for a potentially forthcoming proposed Confirmation Order. To date, five outstanding
95. On May 8, 2025, the Preferred Shareholders filed their Emergency Motion to Terminate Exclusivity Under
96. On May 25, 2026, the Preferred Shareholders filed their Objection to Confirmation of the Debtors’ Joint Prepackaged Chapter 11 Plan of Reorganization.274 The Preferred Shareholders in their objection reiterate their position laid out in the Motion to Terminate Exclusivity, that there is no basis to approve the Intercompany Settlement under Rule 9019, and that the Debtors’ proposed Plan is unconfirmable based on a failure to comport with various provisions of
97. On May 19, 2026, the United States Trustee (the “U.S. Trustee“) filed its Objection to Confirmation of the First Amended Joint
98. On May 19, 2025, interested party Guowei Zhang filed his Objection to Confirmation of the Debtors’ Chapter 11 Plan and Request for Continuance, Additional Disclosure, and Preservation of Rights.279 In his objection, Mr. Zhang requests the Court not confirm the Debtors’ proposed Plan prior to the IRS, equity holders, and other interests parties having a chance to examine the nature of the Debtors’ exposure under the DTL and proposed treatment of the LINTA Exchangeable Notes, as well as the intercompany account history and valuation
99. On May 18, 2026, interested party Salil Rajadhyaksha, acting individually and as “attorney-in-fact” for certain Class A7 (QVCG Common Equity Interests) and Class A6 (QVCG Preferred Equity Interests) Holders, filed his Objection to Confirmation of the Debtors’ Joint Prepackaged Chapter 11 Plan of Reorganization.281 On May 20, 2026, Mr. Rajadhyaksha filed a supplemental objection.282 In his objections, Mr. Rajadhyaksha asserts a variety of arguments as to why the Plan does not meet various requirements of
100. On May 28, 2026, interested party Bhavin Shah filed his Objection to Confirmation of the Debtors’ Joint Prepackaged Chapter 11 Plan of Reorganization.284 In his objection Mr. Shah argues inter alia the Plan was not proposed in good faith, the Disclosure Statement lacks adequate information, and the terms of the Intercompany Settlement are questionable, unfair to common equity holders, and deserve greater scrutiny.285
101. On June 4, 2026, the Court held the first day of the four-day long Combined Hearing, where it considered the Second Amended Plan,286 Disclosure Statement,287 and Motion to Terminate Exclusivity.288 Testimony was adduced from the Debtors’ witnesses Ted Stafford (partner at AlixPartners in the investigations, disputes, and
CONCLUSIONS OF LAW
I. JURISDICTION & VENUE.
I. WHETHER THE INTERCOMPANY SETTLEMENT SATISFIES BANKRUPTCY RULE 9019.
Under
(i) the probability of success in the litigation, with due consideration for the uncertainty in fact and law;
(ii) the complexity and likely duration of the litigation and any attendant expense, inconvenience and delay; and
(iii) all other factors bearing on the wisdom of the compromise.
Id. The “other factors” under prong three, also referred to as the Foster Mortgage factors, include: (i) “the best interests of the creditors, ‘with proper deference to their reasonable views‘“; and (ii) “‘the extent to which the settlement is truly the product of arm‘s-length bargaining, and not of fraud or collusion.‘” Off. Comm. of Unsecured Creditors v. Moeller (In re Age Ref. Inc.), 801 F.3d 530, 540 (5th Cir. 2015) (quoting In re Foster Mortg. Corp., 68 F.3d 914, 917–18 (5th Cir. 1995)). The Debtors, as proponents of the Intercompany Settlement, have the burden of establishing that a balance of the above factors leads to a fair and equitable compromise. In re Allied Props., LLC, No. 06-33754, 2007 WL 1849017, at *4 (Bankr. S.D. Tex. June 25, 2007). The burden under
A. Whether the Intercompany Settlement Warrants Business Judgment Deference.
In general, when considering whether to approve a settlement, the Court gives “[g]reat judicial deference . . . to the [debtors‘] exercise of business judgment.” See In re Robertshaw US Holding Corp., 662 B.R. 300, 314 (Bankr. S.D. Tex. 2024). The Preferred Shareholders argue that because the proposed Intercompany Settlement is between Debtor-insiders, it should be subject to the heightened “entire fairness” standard of review. The Preferred Shareholders argue the QVCG Disinterested Directors were not adequately informed of the settlement due to a fundamentally flawed process, and that they effectively deferred to the other Key Entity Disinterested Directors and the Joint Debtor Advisors throughout the negotiation. Accordingly, the Preferred Shareholders argue entire fairness applies, and the Court should consider both the fairness of the parties’ dealing (the process) and the fairness of the price (the substance) in evaluating whether to approve the Intercompany Settlement.
Notably, the Fifth Circuit has not adopted a categorical rule requiring application of entire fairness to a 9019 merely because the settlement involved debtor-affiliates. Entire fairness review as a concept derives from state-level corporate law principles. Weinberger v. UOP, Inc., 457 A.2d 701, 710 (Del. 1983). Courts apply entire fairness when the facts of the case demonstrate one party stands on both sides of the transaction. ASARCO LLC v. Americas Mining Corp., 396 B.R. 278, 405 (S.D. Tex. 2008) (citing Weinberger, 457 A.2d at 710). The Preferred Shareholders cite numerous cases where courts expressly incorporate entire fairness review when evaluating certain transactions in the bankruptcy context, including settlements of estate causes of action.292
Despite the Key Entities indisputably being statutory “insiders” under the Bankruptcy Code,
The Joint Debtor Advisors facilitated information flow between the company and each Disinterested Director group, providing diligence, fund flow analyses, financial projections, solvency analysis, and valuation analysis of various Debtor entities to equally and adequately inform them of the intercompany transactions and potential intercompany claims. [Findings of Fact 18–24, 59–82]. The Joint Debtor Advisors did not, however, tell the Disinterested Directors what opinions to formulate, or what conclusions to arrive at with respect to the investigation and negotiation. They each made their own independent determinations, through the advice of counsel, as to the existence and magnitude of potential claims, and the legal or factual issues that may exist within them. [Findings of Fact 18–24, 47–57].
The Preferred Shareholders argue the $400 million GUC claim was manufactured to support the other Debtors’ restructuring and evidences a conflict to justify entire fairness review. But they misconstrue the timeline and process of the negotiation. Kobre represented at the February 13, 2026, meeting that QVC‘s potential claims against QVCG were “without merit” and that QVC was solvent during the relevant time periods according to the Duff & Phelps solvency opinions. [Findings of Fact 61]. The Court has already found this was the most aggressive position Kobre could have taken at the outset of negotiations—posturing, to advance the interests of their client. [Id.].
One day before this counsel-only meeting, Kobre advised the QVCG Disinterested Directors of QVCG‘s potential exposure and precarious position. [Findings of Fact 60, 66]. It therefore comes as no surprise that Kobre/the QVCG Disinterested Directors would ultimately walk back Kobre‘s initial posturing at the February 13 meeting, once it became apparent the QVC Disinterested Directors also understood they had the leverage in the negotiations. [Id.; Findings of Fact 65–73].
With respect to the Preferred Shareholders’ argument that QVCG‘s Disinterested Directors’ reliance on Evercore, a “conflicted financial advisor,” evidences a conflict, the Court disagrees as well. Evercore as a Joint Debtor Advisor helped to inform both sides of the transaction, true, but Evercore‘s analysis was not substantively relied on for the purposes of assessing the merits of claims. [Findings of Fact 48, 49, 50, 61, 66]. The QVC and QVCG Disinterested Directors emphasized time and time again their belief that solvency is litigable—not that they believed, one way or the other, that the Duff & Phelps solvency opinions or Evercore‘s analyses were the correct ones—although they each independently recognized the Duff & Phelps solvency opinion would be subject to reliability disputes. [Id.]. Both sides of the transaction took Evercore‘s analyses on insolvency as a data point, much like how they took Kirkland‘s diligence productions and AlixPartners’ fund-flow analyses as data points to inform their understanding of the historical transactions and general state of the company. [Id.]. Indeed, Evercore used different insolvency metrics than Duff & Phelps , which the Disinterested Directors evidently interpreted not necessarily for the truth of the analysis, but for the fact that if either side chose to pursue the claims, disputed financial analyses—for either side‘s respective position—would be litigated at the forefront. [Id.]. This supposed “reliance” on Evercore as a data point did not serve to conflict the QVCG Disinterested Directors.
The Preferred Shareholders’ point that the RSA locked the Parties in before adversarial testing is an argument out of sequence. The terms of the RSA were contingent on the result of the Intercompany Settlement, as evidenced by the negotiation timeline. [Findings of Fact 58–82]. The Boards authorized entry into the RSA only after the terms of the Intercompany Settlement were finalized. [Id.]. The Debtors had incentive from the beginning to undergo a rigorous analysis of the claims, because the gives and gets at the QVC and QVCG levels were still uncertain, particularly at the early stages in the negotiation (e.g., the ultimate value of QVC‘s allowed claim against QVCG, whether to
The Preferred Shareholders argument that “all other” stakeholders having participated in the Intercompany Settlement, represented separately by their respective counsel, does not stand to create a conflict in the Intercompany Settlement. Cleary notably did not specify which Preferred Shareholders they represented, or in what amount. The QVCG Disinterested Directors’ understanding at the time was Cleary represented 1-2% of the entire Preferred Shareholder body. [Findings of Fact 72]. Moreover, the QVCG Preferred Equity was disparately held, having originated as a distribution on the common. [Findings of Fact 3]. It therefore becomes apparent why the QVCG Disinterested Directors declined to engage with Cleary. The Preferred Shareholders as equity were set to be extinguished under the Plan. Even if an Intercompany Settlement was not negotiated and the claims remained in-tact, extinguishing the QVCG Preferred Equity may have been the result of the reorganization anyways. Certain LINTA Noteholders having been represented by Akin Gump Strauss Hauer & Feld LLP is a false dichotomy. This was a creditor constituency, not equity. Moreover, LINTA had categorically more leverage than QVCG in the negotiations, based on the Disinterested Directors’ investigation of the intercompany transactions. [Findings of Fact 48, 51, 84]. LINTA being in a more favorable position than QVCG does not mean a conflict existed.
In sum, the Court concludes the investigation and negotiation of the Intercompany Settlement was not subject to a conflict. Adversarial testing is not a requirement before a settlement can be conflict free.
While this Court does not disagree with the holding of those cases the Preferred Shareholders cited to support the entire fairness inquiry, none are dispositive here because the current facts do not demonstrate
Accordingly, the Court shall review whether the Intercompany Settlement is fair and equitable and in the best interest of creditors under the more deferential business judgment standard of review. In re Robertshaw US Holding Corp., 662 B.R. at 314.
B. Whether the Intercompany Settlement is Fair, Equitable, and In the Best Interest of Creditors.
(1) The Probability of Success in the Litigation, With Due Consideration for the Uncertainty in Fact and Law.
Turning to the first factor, bankruptcy courts need not “conduct a mini-trial to determine the probable outcome of any claims” resolved in the proposed settlement. In re Cajun Elec. Power Co-op., Inc., 119 F.3d 349, 356 (5th Cir. 1997). A court need only “appraise [itself] of the relevant facts and law so that [it] can make an informed and intelligent decision[.]” In re Age Refining Co., 801 F.3d 530, 541 (5th Cir. 2015). The Court has familiarized itself extensively with the historical intercompany transactions potentially giving rise to avoidance,
That the QVCG Disinterested Directors did not formulate a determination on the likelihood of success in prosecuting—or defending—against the claims does not defeat satisfaction of prong one of the
True, the Debtors uniformly maintained the position that the DTL would not materialize, which speaks to supposed “certainty” of litigation (or lack thereof) from the IRS and QVC‘s corresponding indemnity claim. [Findings of Fact 57]. But the magnitude of liability was, in their view, too great not to consider it a highly motivating factor for QVCG to settle QVC‘s potential claims against it. [Findings of Fact 57, 66]. Moreover, other factors, like QVCG‘s limited cash on hand, it not having full tax insurance coverage, and the potential change in ownership issue highlight the fact that even though the DTL had a low likelihood of materializing, a mere single digit risk of loss percentage on the DTL threatened to completely wipe QVCG out. [Findings of Fact 57, 66].
The Preferred Shareholders seem to argue that the Disinterested Directors should be expected to marshal all resources available at QVCG to get something for their constituency. The Court rejects the notion that in order to comply with the standard for
The Debtors and Preferred Shareholders each hold divergent views on how the landscape of caselaw regarding these potential claims support or detract from their positions.296 Although argument in briefing does not elucidate what was going through the mind of the Disinterested Directors, particularly given they were represented by separate conflicts counsel during the investigation and negotiation, it speaks to the nature of how complicated, lengthy, costly, and uncertain litigating the claims would be.
Based on this uncertainty of result, as well as various negative effects litigating the claims may have had, the Court concludes prong one of the
(2) The Complexity and Likely Duration of the Litigation and any Attendant Expense, Inconvenience and Delay.
Next, the Court will consider the “complexity and likely duration of the litigation and any attendant expense, inconvenience and delay” and the difficulty, if any, to be encountered in collecting a judgment. In re Jackson Brewing Co., 624 F.2d 599, 600.
Each type of potential intercompany claim (avoidance, DTL, illegal dividend) individually would implicate manifold legal issues—both under bankruptcy and applicable non-bankruptcy law—as well as extensive and complicated factual issues, particularly as it related to certain Key Entities’ solvency and the reliability of the Duff & Phelps and Evercore insolvency analyses, as well as the extent to which certain Key Entities’ had surplus or net profits at relevant time periods. [Findings of Fact 47–57]. The Disinterested Directors understood
From a different point of view, the Disinterested Directors also understood that a fast and final resolution of the claims was preferable to the company filing bankruptcy and litigating the claims through separate adversary proceedings between Debtor entities. [Findings of Fact 67]. The Intercompany Settlement was also more preferrable to them than pursuing confirmation for all Debtors besides QVCG, and leaving that Debtor “on the operating table” with a limited asset pool to litigate (or defend against) the avoidance claims and dividend claims on their merits. [Id.; Findings of Fact 60, 64, 66]. The Court concludes factor two weighs in favor of approving the Intercompany Settlement.
(3) All Other Factors Bearing on the Wisdom of the Compromise.
With respect to factor three, the Foster Mortgage factors ask the Court to consider (i) whether the settlement is in “the best interests of the creditors, ‘with proper deference to their reasonable views,‘” and (ii) “the extent to which the settlement is truly the product of arm‘s-length bargaining, and not of fraud or collusion.” 68 F.3d at 917–18.
In considering the best interest of creditors, bankruptcy courts should consider the “amount of creditor support for a compromise settlement.” Id. at 914. The Fifth Circuit was careful to note, however, that it was not creating a categorical rule allowing a majority of creditors to veto a settlement. Instead, it emphasized that while the desires of
Here, the Court concludes the Intercompany Settlement is in the best interest of creditors within the meaning of Foster Mortgage factor one. The Intercompany Settlement functions as the keystone to the RSA and the Plan. Without the settlement, the Debtors face an uncertain future, both in terms of the dark waters of litigating the intercompany claims, as well as funding their go-forward operations absent the proposed reorganization, particularly at the CBI level.
Moreover, no creditor has lobbied an objection to the Intercompany Settlement or the Plan. The only objectors are equity and the U.S. Trustee. The Intercompany Settlement and Plan both have overwhelming creditor support. While typical third-party creditors were not parties to the settlement investigation and negotiation, the Key Entities as creditors of one another each agreed to the compromise, through the representation of the Disinterested Directors.
The Plan, in turn, was accepted by a wide majority of each creditor-voting class. These three Voting Classes were significant both in members and dollar value. [Findings of Fact 93]. For example, the LINTA Noteholders took an approximately 92.5% haircut on their claims; despite this significant reduction, they still voted to accept by a wide majority. On the other hand, QVCG was able to pay all its GUC claims in full, including outstanding trade vendor claims, as a result of the Intercompany Settlement. Under Foster Mortgage factor one, the Court is required to defer to creditors’ viewpoint that approval of the Intercompany Settlement is appropriate.297 68 F.3d at 917–18.
The Preferred Shareholders seek to unwind this compromise between the Debtors and various creditor constituencies—despite the amicable and productive result—for their own potential upside. Their
Regarding Foster Mortgage factor two, the extent to which the settlement is truly the product of arm‘s-length bargaining, the Court concludes the facts demonstrate the settlement was achieved through a fair, arm‘s-length process devoid of fraud and collusion. [See Findings of Fact 18–82 (detailing both investigation and negotiation)]. The Key Entities were each represented by Disinterested Directors who obtained independent conflicts counsel to represent and advise them throughout their investigation and negotiation. [Findings of Fact 14–16]. The nature of using the Joint Debtor Advisors to facilitate information flow and inform the Disinterested Directors about the company and historical intercompany transactions does not demonstrate the process was not arm‘s-length.
Nor was the result preordained as the Preferred Shareholders suggest. The company initially proposed different terms for the restructuring than that which were agreed upon by virtue of the Intercompany Settlement. [Findings of Fact 59]. That Kobre proposed releases as the Preferred Shareholders “potential recovery” at the February 12, 2026, status update does not demonstrate them ultimately receiving solely releases under the Intercompany Settlement was a preordained result. [Findings of Fact 60, 68]. Kobre and the QVCG Disinterested Directors negotiated as best they could for a better result both for QVCG and the Preferred Shareholders, as all disinterested fiduciaries are expected. [Findings of Fact 60–68]. The $400 million GUC claim was not arrived at to manufacture Plan confirmation. The QVC Disinterested Directors explained that it was the lowest figure they could accept as fiduciaries. [Findings of Fact 64].
The fact that the QVCG Disinterested Directors did not engage with the Preferred Shareholders or QVCG Preferred Equity Holders during the negotiation process does not demonstrate their ultimate
Based on the extensive evidentiary record before it, the Court finds the settlement is fair and equitable and in the best interest of the estates and their creditors. All factors weigh in favor of an approval of the Intercompany Settlement, and the Court finds it reflects a sound exercise of the Debtors’ business judgment. Therefore, the Court approves the Intercompany Settlement.
III. WHETHER THE PLAN COMPLIES WITH THE REQUIREMENTS OF § 1129 .
The Debtors, as the proponents of the Second Amended Plan, have the burden of proving all elements of
(A) Section 1129(a)(1): The Second Amended Plan Complies With the Applicable Provisions of Title 11.
The Preferred Shareholders argue that the Second Amended Plan violates
In Serta, the Fifth Circuit on independent grounds reversed the court‘s prior approval of a reorganization plan which treated intra class creditors unequally. 125 F.4th 555, 591–93 (5th Cir. 2024). In Serta there were two classes in question: one, creditors who participated in the “2020 Uptier” and continued to hold super-priority debt from the uptier transaction (“Class 3“); the other, creditors who did not participate in the 2020 Uptier, but later purchased the super-priority debt on secondary markets (“Class 4“). Id. at 571. The reorganization plan ultimately contemplated by the court provided both Classes 3 and 4 with an indemnity whereby the company agreed to indemnify recipients for any losses, claims, damages and liabilities which they might incur in connection with their participation in the 2020 Uptier. Id. The Fifth Circuit took many issues with the reorganization plan, inter alia, but specifically with respect to
To [certain class members], the indemnity was potentially worth millions or even tens of millions of dollars. But to other class members [] that had no involvement with the uptier, the indemnity was worth little or even nothing. Thus, some class members received settlements with higher effective values than their co-class members. [] Given this differential, the Plan indemnity constituted impermissible unequal treatment.
Id. at 591–92 (citations omitted).
they now decry that a release of liability for those claims would be incredibly valuable to only some members of Class A6.
While the Fifth Circuit declined to articulate the scope of what equal treatment means under
The Second Amended Plan treats all Preferred Shareholders the same. The Debtor releases they receive are not contingent on such treatment. Courts have previously held exculpation and release provisions have no bearing on a plan‘s treatment of claims or interests. In re Adelphia Comm. Corp., 368 B.R. 140, 250–51 (Bankr. S.D.N.Y. 2007). Nor do the Debtor releases here have any bearing on the treatment of the Preferred Shareholders’ interest.
not on their interpretation of the law, but on their facts, concluding that Class 3 and 4 members had not all similarly participated in the 2020 Uptier in an analogous manner to how all tort-claimant class members had suffered injuries as a result of exposure to asbestos. The Fifth Circuit stated “[a] better analogy would be a plan distribution by which all class members were given the opportunity to litigate their asbestos injuries, but only half had such injuries. We do not think our sister circuits would find such arrangement compliant with
(B) Section 1129(a)(2): The Proponent of the Second Amended Plan has Complied with the Applicable Provisions of Title 11.
Here, the disclosure statement includes, among other information: a summary of the events leading to the Chapter 11 cases, including prepetition challenges and initiatives; an overview of the Intercompany Settlement; the key terms of the Debtors’ Plan; risk factors affecting the Plan; information on federal income tax consequences; and it attached the RSA, the Plan of Reorganization, financial projections, and liquidation and valuation analyses.306 The Court concludes that the Disclosure Statement contains adequate information for parties-in-interest to make an informed judgment of the Plan. As such, it approves the Disclosure Statement on a final basis.
The objecting Preferred Shareholders argue that the Disclosure Statement fails to provide adequate information regarding the Intercompany Settlement.307 They argue that the Debtors’ disclosures of the QVC-QVCG Settlement are inadequate because it “assigns no value or estimated range to any individual Potential Claim, provides no analysis of the relative strengths and weaknesses of those claims, and offers no explanation of how the identified claims were aggregated or discounted to arrive at the $400 million figure.”308
The Court disagrees and concludes the Disclosure Statement contains sufficient information concerning the Intercompany Settlement to warrant approval. The Disclosure Statement contains a multi-page overview of the Intercompany Settlement including information regarding the Disinterested Directors’ Investigations, their process, and a summary of potential claims.309 The information contained in the Disclosure Statement is sufficient to convey the
Further,
(C) Section 1129(a)(3): The Second Amended Plan was Proposed in Good Faith and Not by any Means Prohibited by Law.
To begin, the Court notes that the Intercompany Settlement and the Second Amended Plan are good results for the Debtors and their creditors, generally. The Debtors were able to right-size their balance sheet, improve liquidity, and position their go-forward operating entity QVC for long-term success. The Debtors also rescued CBI from its silo and brought it under QVC‘s umbrella, enabling synergies that might otherwise save an entity which the Disinterested Directors believed had an uncertain future. [Findings of Fact 76]. The Debtors were also able to pay all third-party GUC claims in full. [Findings of Fact 86]. Under Sun Country, these considerations weigh in favor of a conclusion that the Second Amended Plan was proposed with a legitimate and honest purpose of reorganizing the business, and that the plan has a reasonable hope of success. 764 F.2d at 408. These considerations are also consistent with the Bankruptcy Code‘s underlying purpose of preserving
The Second Amended Plan has been met with overwhelming creditor support, evidenced by inter alia all Voting Classes accepting by large margins, and the Unsecured Creditors’ Committee expressing its support. [Findings of Fact 93; ECF No. 392]. The Second Amended Plan, along with the RSA, Intercompany Settlement, and related documents were products of negotiations between the Debtors and the Consenting Stakeholders held at arm‘s-length and in good faith. [Findings of Fact 58-82]. The Second Amended Plan does not improperly benefit any single constituency, but represents a robust compromise where many, if not all stakeholders made concessions to achieve the result. Under Village at Camp Bowie, all of these factors weigh in favor of concluding the Second Amended Plan was proposed in good faith. 710 F.3d at 247.
The Preferred Shareholders, Mr. Rajadhyaksha and Mr. Shah each object to confirmation on grounds that the Debtors’ Second Amended Plan was not proposed in good faith. With respect to the Preferred Shareholders, their argument centers around the process of negotiating the Intercompany Settlement. The Court has dispelled concerns the Intercompany Settlement was the product of a capitulation or that it was preordained. [Findings of Fact 68]. Rather, the agreement was the product of a robust and arm‘s-length process between disinterested fiduciaries of each box at the company. [Findings of Fact 58-82]. The process was not, however, result-oriented, and no direct evidence indicates otherwise. Moreover, the QVCG Disinterested Directors (or Debtors, generally) not having engaged the Preferred Shareholders as part of the negotiation does not indicate a fraud. They held the belief that the QVCG Preferred Equity was disparately held, and that Cleary only represented 1-2% of the entire holder base. [Findings of Fact 72]. Moreover, the Cleary letter was sent at time when the Disinterested Directors were months into the process. [Id.]. Nonetheless, the QVCG Disinterested Directors took the Preferred
With respect to Mr. Rajadhyaksha‘s and Mr. Shah‘s arguments regarding the fact that the company did not disclose its contemplated restructuring, there is no such requirement under the Bankruptcy Code. Nor does a lack of disclosure as to highly sensitive bankruptcy considerations at the upper levels of management demonstrate the Second Amended Plan was not proposed with a legitimate hope of a successful reorganization. See Sun Country, 764 F.2d at 408. Mr. Rajadhyaska‘s other allegations regarding prepetition public communications, executive compensation, solvency and other governance issues similarly miss the mark. The Court concludes none of these considerations weigh in favor of a conclusion that the Second Amended Plan was not proposed in good faith under
Accordingly, the Court concludes the Second Amended Plan satisfies
(D) Section 1129(a)(4): All Payments for Services or Costs in Connection with the Debtors’ Chapter 11 Case are Subject to Court Approval.
Any payment made or to be made by the proponent, by the debtor . . . for services or for costs and expenses in or in connection with the case, or in connection with the plan and incident to the case, has been approved by, or is subject to the approval of, the court as reasonable.
Here, Article I of the Second Amended Plan provides that professionals are compensated for services pursuant to
Courts find that a debtor‘s inability to specifically identify future board members does not mean the debtor has not met the requirements of
(F) Section 1129(a)(6): § 1129(a)(6) is Inapplicable.
(G) Section 1129(a)(7): The Second Amended Plan Satisfies the “Best Interests” Test.
A plan satisfies
Here, the Debtors prepared a Liquidation Analysis to reflect estimated recoveries under a hypothetical chapter 7 liquidation.322 The Liquidation Analysis assumes the Court denies confirmation and that the Debtors seek and are granted court approval of the Intercompany
The objecting parties argue that the plan does not meet the “best interests test” as to the QVCG Debtor.325 They contend that under the Plan they receive nothing, but under a chapter 7 liquidation they would likely receive a recovery.326 The Preferred Shareholders assert that the intercompany claims lack merit and that a chapter 7 trustee would litigate the claims and either reduce the claims or eliminate them completely.327 At which point, they allege, Preferred Shareholders would potentially realize a significant recovery.328 Further, they assert that even if the settlement was adopted by a chapter 7 trustee there would be a residual value to pay preferred shareholders.329
First, in a hypothetical liquidation, the trustee may choose to adopt the Intercompany Settlement. In such a case, the Debtors’
Second, as discussed supra, the Intercompany Claims are highly uncertain, complex, and would likely result in prolonged and costly litigation. If a chapter 7 trustee were to choose to litigate the Intercompany Claims, the evidence supports that litigation would likely be value destructive and all QVCG stakeholders would be worse off. [Finding of Fact 68]. The chapter 7 trustee would need to win on all claims for there to be a recovery to Preferred Equity. However, if the trustee were to lose on even a fraction of potential claims, it is possible that the QVCG cash would be wiped out—both by the claim itself and the cost to litigate—and stakeholder recovery would be diminished. The result would be that equity would still receive no recovery under this scenario, which is what they receive under the Second Amended Plan.
(H) Section 1129(a)(8): The Plan is Confirmable Notwithstanding Its Failure to Satisfy § 1129(a)(8).
(I) Section 1129(a)(9): The Second Amended Plan Provides for Payment of all Allowed Priority Claims.
(i) if such class has accepted the plan, deferred cash payments of a value, as of the effective date of the plan, equal to the allowed amount of such claim; or
(ii) if such class has not accepted the plan, cash on the effective date of the plan equal to the allowed amount of such claim[.]
Additionally,
The Second Amended Plan satisfies each of the requirements set forth in
(J) Section 1129(a)(10): At Least One Class of Impaired Creditors Accepted the Second Amended Plan as to the QVC and LINTA Debtors, and § 1129(a)(10) Does Not Apply to QVCG or the CBI Debtors Because They Do Not Have Any Impaired Classes.
Here, as to the QVC Debtor, Classes B3 and B4 are impaired under the Second Amended Plan and have voted to accept, independent
The objecting Preferred Shareholders argue that
However, the Bankruptcy Code is clear that
The Court disagrees with the Preferred Shareholders’ argument.
Except as provided in
section 1123(a)(4) of this title [Title 11], a class of claims or interests is impaired under a plan unless, with respect to each claim or interest of such class, the plan—(1) leaves unaltered the legal, equitable, and contractual rights to which such claim or interest entitles the holder of such claim or interest . . .
Here, the QVC-QVCG Settlement Claim is based on the Intercompany Settlement discussed supra and memorialized in the RSA. In it, QVC has consented to a less favorable treatment—accepting a $400 million claim and receiving in full satisfaction of that claim the QVCG distributable cash and 62% equity interest in CBI. Because QVC has agreed to settle its claim, it is considered unimpaired under the Second Amended Plan.
Further, the objecting Preferred Shareholders’ argument that plan proponents could create settlements to get around the provisions of
The Court concludes that QVCG does not have an impaired class of claims, so
(K) Section 1129(a)(11): Confirmation of the Second Amended Plan is Not Likely to be Followed by the Liquidation, or the Need for Further Financial Reorganization, of the Debtor.
A plan must be feasible.
Confirmation of the plan is not likely to be followed by the liquidation, or the need for further financial reorganization, of the debtor or any successor to the debtor
under the plan, unless such liquidation or reorganization is proposed in the plan.
Courts consider a list of factors for feasibility of a reorganization plan. This list typically includes:
- the adequacy of the debtor‘s capital structure;
- the earning power of the debtor‘s business;
- economic conditions;
- the ability of the debtor‘s management;
- the probability of the continuation of the same management; [ ]
- and [sic] any other related matter which determines the prospects of a sufficiently successful operation to enable performance of the provisions of the plan.
Save Our Springs Alliance, Inc. v. WSI (II)-COS, L.L.C., 632 F.3d 168, 173 n.6 (5th Cir. 2011). The Court is not required, however, to consider all six factors. Id. at 173.
The Court concludes that the Second Amended Plan is feasible. The Debtors have prepared financial projections forecasting the Reorganized Debtors financial performance for the annual periods ending December 31, 2026 through to December 31, 2029.347 These projections support Debtors’ assertion that the Reorganized Debtor will be able to meet their obligations under the Plan as they come due.348 Furthermore, the Second Amended Plan contemplates reducing billions
(L) Section 1129(a)(12): All Fees Payable Under 28 U.S.C. § 1930 Have Been Paid Or Will be Paid on the Effective Date.
(M) Section 1129(a)(13): The Second Amended Plan Provides for Continuation of Retiree Benefits Post-Effective Date.
(N) Sections 1129(a)(14) Through (16) Are Inapplicable.
(O) The Second Amended Plan Complies With § 1129(b) of the Bankruptcy Code.
[I]f all of the applicable requirements of subsection (a) of this section other than paragraph (8) [11 U.S.C. 1129(a)(8)] are met with respect to a plan, the court, on request of the proponent of the plan, shall confirm the plan notwithstanding the requirements of such paragraph if the plan does not discriminate unfairly, and is fair and equitable, with respect to each class of claims or interests that is impaired under, and has not accepted, the plan.
(1) The Plan is “Fair and Equitable.”
With respect to a class of impaired unsecured claims,
Under the Debtors’ Second Amended Plan, no class junior to the impaired and deemed rejecting classes—classes A6, A7, A8, B8, C7, and D6— is receiving anything under the Plan. As for the classes which are for certain Intercompany Claims and Interests—A5, B6, B7, C5, C6, D4, and D5—which may be reinstated, and thus have unimpaired status, the Debtors contend that the treatment of these would be for the “purposes of preserving the Debtors’ corporate structure and will have no economic substance.”352 Under these circumstances, the Plan satisfies
“The corollary of the absolute priority rule is that senior classes cannot receive more than one hundred percent (100%) recovery for their claims.” In re Idearc, Inc., 423 B.R. 138, 170 (Bankr. N.D. Tex. 2009). A senior class of creditors cannot receive more than the full amount of their claim, and any excess must flow to junior classes. In re Granite Broad. Corp., 369 B.R. 120, 140 (Bankr. S.D.N.Y. 2007).
Objecting parties argue that the Plan violates the corollary to the absolute priority rule because QVC is receiving more than 100% of its $400 million claim.353 The evidence does not support this argument. As discussed supra, the evidence supports the proposition that QVC is not receiving more than a 100% recovery. [Finding of Fact 88]. The sum of 62% of the high end of Evercore‘s valuation of Cornerstone and the QVCG Distributable Cash is less than QVC‘s $ 400 million GUC claim. The Second Amended Plan satisfies the corollary to the absolute priority rule because no senior class is receiving more than 100% recovery for their claims. Therefore, the Court concludes that the Second Amended Plan is “fair and equitable” under
Under
Here, the Second Amended Plan does not unfairly discriminate between similar classes of claims and interests. The Second Amended Plan classifies claims in a permissible manner based on legally acceptable rationale. QVCG equity interests—Classes A6 and A7—sit at the bottom of the priority scheme, and no junior classes will receive a recovery.355 Similarly,
Further, with respect to the potentially impaired classes of Intercompany Claims and Interests—Classes A5, B6, B7, C5, C6, D4,
Therefore, the Court finds that the Second Amended Plan properly classifies claims and interests according to priority and character, and it does not unfairly discriminate impaired rejecting classes.
(P) Section 1129(c): The Second Amended Plan Satisfies § 1129(c) of the Bankruptcy Code.
The Debtors have met all requirements of
IV. THE SECOND AMENDED PLAN‘S THIRD-PARTY RELEASES ARE CONSENSUAL.
The U.S. Trustee objects to the Second Amended Plan‘s opt out third-party releases and contends that they are nonconsensual and, therefore, prohibited under the United States Supreme Court‘s decision in Harrington v. Purdue Pharma L.P., 603 U.S. 204 (2024).357 However, well-established precedent in this district, as well as the district court‘s decision in Container Store, acknowledge that under the appropriate circumstances the failure to opt-out can constitute consent to a third-
The Court finds that the third-party releases satisfy the applicable law. Interested parties were provided sufficient notice, an opportunity to opt-out, and the disclosure statement contained a detailed description of the opt-out and third-party releases. See In re Container Store Grp., Inc., 676 B.R. at 384 (listing factors courts consider “in determining whether the procedures around the opt-outs were sufficient to find consent“). Therefore, the Court finds that the Plan complies with Container Store, and the U.S. Trustee‘s objection is overruled.
V. PREFERRED SHAREHOLDERS’ MOTION TO TERMINATE EXCLUSIVITY
The objecting Preferred Shareholders filed an Emergency Motion to Terminate Exclusivity Under
Based on the foregoing reasons, the Court hereby OVERRULES all objections; APPROVES the Disclosure Statement; CONFIRMS the Second Amended Plan; and RESERVES JUDGMENT on the Motion to Terminate Exclusivity.
The Debtors are requested to submit a confirmation order consistent with this Memorandum Decision‘s Findings of Fact and Conclusions of Law within (7) days.360
SIGNED 07/15/2026
___________________________________
Alfredo R Pérez
United States Bankruptcy Judge