In late January 2026, I purchased $20,000 in par value of QVC’s 5.95% senior secured notes due 2043 at roughly 45 cents on the dollar, for an initial investment of approximately $9,000.
I wrote about the opportunity in QVC bonds here: QVC Bonds: Cheap Senior Secured Debt Trading at 45 Cents on the Dollar
Today I wanted to give readers an update on how this investment has played out.
In the writeup, I said,
“My base case is that QVC undertakes a balance-sheet restructuring within the next 12–18 months. This is not a worst-case outcome, and neither is it a certainty. Importantly, the investment thesis does not depend on avoiding Chapter 11; it depends on senior secured recoveries exceeding current prices across a range of plausible outcomes.”
Less than three months later, QVC did indeed file for Chapter 11 bankruptcy. A restructuring can accelerate the investment timeline, serving as a catalyst that unlocks value for distressed debt investors.
Assuming that the senior bonds are in an advantageous position in the debt stack and the investor has paid a substantial discount to estimated recovery value, distressed bondholders can often profit during a corporate restructuring. This is not the case for common and preferred shareholders, who often get completely wiped out.
The most important question for the distressed credit investor is:
What will I ultimately recover relative to the price I am paying today?
In QVC’s case, I believed the market price of the bonds offered a substantial discount to their probable recovery value. Bankruptcy was certainly a risk, but it was a risk I believed could be underwritten.
“Even if QVC files for Chapter 11 bankruptcy, the base case recovery estimates for the senior secured debt is 70 - 90%.”
Recovery Value
The recovery amount ended up being a little less than my initial estimates, but I still have realized a positive investment outcome on my QVC investment.
Six and a half months after my original writeup (as of last Thursday, August 6th) QVC emerged from Chapter 11 bankruptcy. My $20,000 face-value position ultimately resulted in receiving:
$2,189.58 in cash
$5,243 face value of new 10% first-lien senior secured Takeback Notes
198 shares of the “new” reorganized QVC (currently valued @ ~$19.49 per share as of August 10th, 2026) = $3,859
plus, a $595 coupon payment I received in mid-March before the bankruptcy filing
Total recovery as of August 10, 2026, = $11,886.58 (~59% of par value)
I purchased $20,000 face value for roughly 45% of par, so my initial investment was not $20,000 but about $9,000. This was lower than my initial recovery estimates of about 70% but I’m still up on the position because my all-in cost was roughly 45% of par value.
The cash and Takeback Notes alone represented:
$2,189.58 + $5,243 = $7,432.58
In other words, before assigning any value to my 198 shares, I had recovered value equal to approximately 86.5% of my original purchase price through cash and new secured debt.
As of August 10th, 2026, the new QVC equity (QVCG) closed at $19.49, so the total value is $3,859.
That’s approximately a 32% return in roughly six and a half months and a roughly 60% annualized return based on valuing the Takeback Notes at par and the equity at Evercore’s midpoint enterprise valuation.
Distressed debt investing illustrates why price, capital structure and recovery value can matter far more than whether a company ultimately files for bankruptcy.
How I Found the Opportunity
Prior to its bankruptcy filing, QVC was dealing with a heavily leveraged balance sheet coupled with declining revenue and deteriorating television viewership. QVC is still a challenged retailer but now has reduced its debt by $5 billion, which should give the company some breathing room to focus on its turnaround plans.
The market tends to be overly pessimistic in situations like QVC and in the case of distressed debt there is an added discount for complexity/illiquidity and uncertainty of coupon payments and recovery values.
I look for investment opportunities where the market has underpriced the investment in relation to its intrinsic value. QVC’s 5.95% senior secured notes due 2043 were trading at roughly 45 cents on the dollar in late January 2026. In the case of QVC bonds, because the senior secured debt was at an advantageous position in the capital stack, it seemed very likely that investors would receive at least 50 – 60% of par value in a restructuring but the bonds were only trading for 45% of par.
Again, I should emphasize that QVC bonds I bought were senior secured claims at the op-co level.
In my previous writeup I wrote, “All three bonds are OpCo-level senior secured claims backed by inventory, receivables, and cash. At prices in the mid-40s, they are not bets on a business turnaround but claims on assets plus a viable going concern.
Recoveries are anchored by a liquidation floor (~40–50%) and capped by going-concern EV after DIP/admin (~60–80% in a base case). The key risk is process (DIP size/control), not asset absence.”
This is one of the attractive characteristics of distressed credit. By buying the QVC bonds at a steep discount, my ultimate recovery value didn’t need to approach par for the investment to work.
I needed to determine whether the underlying enterprise was worth enough to produce a recovery materially above the price I was paying.
That required thinking about QVC differently.
Instead of asking:
What is QVC’s stock worth?
I was asking:
What is QVC’s enterprise worth, where do the 2043 notes sit in the capital structure, and how much value would be left for this security in a restructuring?
That distinction becomes the foundation of the investment thesis for a distressed bond investor.
Chapter 11 proceedings can move surprisingly quickly because the process is highly structured and governed by a well-established framework under the U.S. Bankruptcy Code.
Chapter 11 restructurings are costly for companies and their creditors. Moreover, lenders, suppliers, employees, and any other claimants want to receive what they are owed. In order to maximize the proceeds available for the claimants, there is an incentive for most parties to expedite the restructuring proceedings.
The Evercore Valuation
One of the more important pieces of information came from Evercore’s valuation analyses during the restructuring proceedings.
Evercore estimated the net enterprise value of reorganized QVC at approximately:
$1.85 billion to $2.25 billion
with a midpoint of:
$2.05 billion.
After accounting for approximately $1.275 billion of pro forma funded debt and adding estimated emergence cash, Evercore estimated the value of the reorganized equity at approximately:
$998 million to $1.398 billion
with a midpoint of approximately:
$1.198 billion.
That provided an important anchor for estimating recovery.
The restructured QVC has about 50 million initial shares.
At Evercore’s midpoint valuation:
$1.198 billion ÷ 50 million shares ≈ $23.96 per share
That figure would later become useful for estimating the value of the equity portion of my recovery. The new QVC shares (QVCG) opened at $20 on the first day of trading.
Making the Takeback Notes Election
One unusual part of the restructuring was that eligible creditors could elect to receive Takeback Notes rather than the Takeback Term Loan.
I ended up selecting the Takeback Notes.
The new notes are:
10% First Lien Senior Secured Takeback Notes due 2032.
For an individual investor holding the securities through Schwab, I preferred the notes.
The Takeback Notes and term loan were quite similar. However, I believe the notes are likely to have more trading liquidity should I ever decide to exit the position.
The election process itself turned out to be more complicated than expected.
Schwab initially accepted my election, later cancelled it because of missing paperwork, and I ultimately had to work with Schwab to make sure the accredited-investor documentation and election were properly processed.
It was a good reminder of something that doesn’t show up in a spreadsheet:
Distressed investing can involve considerable administrative complexity.
Distress investing is a special situation, “event-driven” type of investment that can offer profitable investment opportunities for those investors willing to do some extra work. However, it’s not for everyone. Distressed bond investors have to be willing to deal with missed coupon payments, uncertain timelines, and holding an illiquid bond during the restructuring process.
Reading the restructuring documents is only part of the job. Elections, deadlines, certifications and brokerage procedures can directly affect what securities you receive.
In the next sections, I’ll review what I learned from this investment and what I think the new QVC equity could be worth.
