Former iMedia: Unsecured creditors committee objects to plan releases

By Sarah Lizee

Olympia, Wash., Dec. 12 – Legacy IMBDS, Inc.’s (formerly iMedia Brands, Inc.) Chapter 11 plan of liquidation drew an objection from the official committee of unsecured creditors, according to documents filed Tuesday with the U.S. Bankruptcy Court for the District of Delaware.

The committee said that while it has been able to resolve most of its concerns regarding the plan with the debtor, one issue remains, and it’s critically important to unsecured creditors.

Through the plan, the debtors propose to release their claims and causes of action against all of their current and former directors, managers, officers and employees, except for those against former chief executive officer Tim Peterman.

The committee said the plan’s releases are “fundamentally unfair” to creditors and do not benefit the debtors’ estates.

Unsecured creditors’ only potential recoveries under the plan will come through the prosecution of the debtors’ claims and causes of action that were not sold in the debtors’ recent asset sale.

“Here, the debtors propose to release nearly all of their remaining causes of action (i.e., all claims except those against Tim Peterman), and to do so for no consideration – as the parties benefitting from the releases are providing no consideration whatsoever to the estates,” the committee said in its objection.

The committee also said the releases are not “in any way necessary” to the consummation of the plan, as they are not a component of a settlement to be implemented through the plan nor are they a prerequisite to the receipt of plan funding.

“At the end of the day, the releases have been included in the plan for no valid business reason – but rather simply because the debtors’ board wants them,” the group said.

A combined hearing on final approval of the disclosure statement and confirmation of the plan is scheduled for Dec. 21.

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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