Former iMedia’s disclosure statement draws U.S. trustee objection

By Sarah Lizee

Olympia, Wash., Oct. 26 – Legacy IMBDS, Inc.’s (formerly iMedia Brands, Inc.) motion seeking interim approval of the disclosure statement for its Chapter 11 plan of liquidation drew an objection from Regions 3 and 9 U.S. trustee Andrew R. Vara, according to documents filed Wednesday with the U.S. Bankruptcy Court for the District of Delaware.

The U.S. trustee said he objects to the motion because it proposes a voting procedure that strips creditors entitled to vote on the plan, and who vote to accept the plan, of their direct claims against various non-debtor third parties without allowing them to opt out to the third-party release.

“Simply by voting to accept their treatment under the plan, these creditors would automatically release their direct claims of fraud, gross negligence, and willful misconduct against various non-debtors because the third-party release does not contain an exception for fraud, willful misconduct, and gross negligence,” Vara said in the objection.

The U.S. trustee said that allowing creditors voting to accept the plan the ability to separately opt out of the third-party release on the applicable ballot ensures that the third-party release is supported by consent.

A hearing is scheduled for Nov. 1.

iMedia Brands is an interactive media company based in Eden Prairie, Minn. The company filed bankruptcy on June 28 under Chapter 11 case number 23-10852.

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