QVC’s bankruptcy battle has taken a fresh turn after preferred shareholders objected to a restructuring plan that could wipe out their $1.4bn investment.
The once-dominant shopping channel filed for Chapter 11 bankruptcy protection in a Houston court last month, as it looks to restructure around $6bn of debt.
The business, which became a household name through its television shopping model, is now valued at around $2bn on a reorganised enterprise basis.
QVC had hoped to secure court approval for its restructuring plan in under two months, following months of negotiations with key creditors before the filing.
However, holders of $1.4bn worth of preferred stock have lodged a formal objection, arguing they were left out of the process and now face being wiped out under the proposed deal.
The investors have asked the court to appoint a dedicated bankruptcy committee to represent their interests.
The preferred shares have recently tripled in value to around $6, although they remain about 94 per cent below their face value.
The dispute centres on where value in the business sits and which group of stakeholders has the strongest claim to it.
Preferred shareholders argue that their stock was issued by a parent company that still holds around $200m in cash, as well as an equity stake in catalogue business Cornerstone.
They claim those assets should be available to them, while QVC’s other debts were issued by subsidiaries lower down the corporate structure.
QVC’s directors have taken a different view, deciding that the $200m belongs to the subsidiaries that originally generated the profits.
The case highlights the complexity of large retail debt restructurings, where corporate structures and the speed of bankruptcy proceedings can heavily shape the outcome for investors.
Businesses under pressure often seek fast court approval to avoid further damage to trading, while judges can also favour speed if it helps keep a company operating.
QVC’s future remains uncertain, but the retailer is far from a minor player.
While it may be unlikely to return to its 1980s and 1990s peak, or to the $14bn in annual revenue it generated before the pandemic, it still reported $9.2bn in sales last year.
The company has been trying to adapt its model for the digital age, including through social media retail on platforms such as TikTok and wider digital distribution.
Those efforts have yet to deliver a full turnaround, but removing a significant portion of its debt burden could give the retailer more room to stabilise.
Preferred shareholders now face a difficult fight, particularly as every other major stakeholder has already backed the restructuring plan.
QVC’s suppliers, which include many small businesses that rely on the platform as a sales channel, are not currently being asked to give up their claims.
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