On July 20, 2026, Simply Interior Homes, LLC and six affiliated debtors filed a Combined Disclosure Statement and Chapter 11 Plan of Liquidation in the United States Bankruptcy Court for the District of Delaware at Docket No. 265. The filing came 42 days after the June 8, 2026 petition date, before the qualified bid deadline had passed and before any auction was held.

The structure is familiar. Substantially all assets are being marketed for sale and liquidated, remaining assets vest in a liquidating trust on the effective date, and a liquidating trustee distributes proceeds through a waterfall. What makes this plan worth reading closely is what sits inside the trust. The plan states that the retained causes of action and related rights constitute the majority of the liquidating trust assets, and it identifies the targets of those claims by name in a defined term: Non-Released Party. That definition captures the debtors' equity sponsor, two of its affiliated funds, a related noteholder entity, two individuals, and the seller entity under the Membership Interest Purchase Agreement.

Projected recoveries for Classes 3, 4, and 5, the three classes entitled to vote, are all listed as "Unknown." The plan explains why in a footnote to the classification table: actual recoveries depend on the ultimate litigation, settlement, or other monetization of the retained causes of action, and that value is described as inherently unknowable and speculative. No value has been ascribed to those claims anywhere in the document.

The debtors were formed in early 2025 through a carve-out of the soft goods business divisions from Keeco, LLC, a portfolio company of Centre Lane Partners. Keeco supplied both utility bedding and soft goods. The sponsor had scaled Keeco over roughly five years through acquisitions focused on utility bedding, and those acquisitions brought along soft goods categories that the disclosure statement describes as not synergistic with the manufacturing-focused utility bedding platform. The carve-out separated the two.

The transaction was structured in two steps. The collateral agent under Keeco's then-defaulted term loan facility conducted a partial strict foreclosure under Article 9 of the Uniform Commercial Code on collateral associated with the soft goods division and transferred that collateral to entities designated by the sponsor. The parties then completed the separation through a Membership Interest Purchase Agreement among the debtor purchaser entity, Live Comfortably Borrower LLC as seller, and the operating debtor as the company. Keeco rebranded as Live Comfortably and retained the utility bedding business.

The transaction was originally expected to close in late October 2024. It closed on February 21, 2025, approximately four months late. That delay is not a footnote in the debtors' account of what went wrong. It is the first link in the chain.

Because of the delay, the sponsor pre-funded a portion of the purchase price and released inventory, which the disclosure statement states enabled Live Comfortably to recognize approximately $21 million of revenue from the soft goods business for January and February 2025, before the debtors existed as an operating company. The revenue was recognized by the seller. The corresponding payables came to the debtors.

The disclosure statement sets out the sponsor's projections for the standalone company alongside what the debtors say they actually received at closing. It also notes that the projections were relied upon by the debtors' prospective lenders to underwrite the financing.

The disclosure statement states that the debtors started with no cash on hand, though they did draw on the prepetition revolving facility. Of the approximately $29 million of inventory delivered, it states that approximately $22 million consisted of excess and obsolete inventory. The usable inventory position was therefore a fraction of the roughly $49 million of finished goods the sponsor had projected. Management revised the 2025 revenue plan from $185 million down to $86 million. Actual fiscal year 2025 gross revenue came in at approximately $84.7 million with approximately $3.4 million of adjusted EBITDA.

The operational consequence followed the inventory position. On the first day of operations, fill rates were approximately 30 to 40 percent for most product categories against the 95 percent or greater that the debtors' retail partners expected. The disclosure statement states that the debtors lost material sales programs with certain major customers as a direct consequence, including Wal-Mart. A sales and operations planning process rebounded fill rates to over 90 percent by the fourth quarter of 2025, but certain programs were not recommenced.

Reciprocal tariffs took effect on April 15, 2025 and further reduced margins. The disclosure statement states that the sponsor directed the debtors to forgo passing tariff cost increases on to customers based on the sponsor's expectation that it would secure an exemption from all applicable tariffs, and that the sponsor provided limited financial support to address the tariff impact. By the petition date, the debtors had gone more than twelve weeks without making material payments to suppliers, including customs and duties, and service providers and customs brokers were holding inventory at ports and in transit.

A carve-out debtor that depends on the seller for back-office services is not unusual. What the disclosure statement describes here goes further. The debtors had no independent information technology systems at formation. The services provided under the transition services agreement span corporate information technology, finance and accounting including accounts receivable and treasury, human resources and payroll, operations support including customs bond access and distribution center access, and sales and marketing support including demand planning and merchandising. The disclosure statement states that the agreement was negotiated by the sponsor and Live Comfortably's leadership in 2024, before the debtors' management team was hired.

The dependency extended to cash. Delays in updating the debtors' formal name change with the Internal Revenue Service left the debtors unable to establish new vendor accounts with certain major customers, so customer remittances continued to flow to Live Comfortably throughout 2025 and into 2026. From January to May 2026, the debtors' customers remitted more than 75 percent of the debtors' collections to Live Comfortably's bank accounts, in amounts ranging from $300,000 to $1.5 million per week.

On April 28, 2026, Live Comfortably delivered a formal notice of breach asserting that the debtors had failed to pay approximately $5.1 million for transition services, and reserved the right to terminate the agreement and suspend services. The debtors dispute that characterization and have demanded a comprehensive reconciliation, including a full accounting of historical wrong-pockets payments received on the debtors' behalf and all setoffs applied. The reconciliation has not been completed. The disclosure statement states the debtors' belief that Live Comfortably, at the direction of the sponsor, may have inappropriately set off a significant amount of cash collections rightly belonging to the debtors.

The threatened termination is what forced the timing. Losing the services would have shut down substantially all of the debtors' back-office operations and would likely have triggered an event of default under the prepetition credit facility. The plan reflects that the dispute remains live: rather than assuming or rejecting the agreement on the effective date along with every other executory contract, the plan gives the post-effective date debtors and the liquidating trustee up to 180 days from the effective date to decide, with automatic rejection if no cure notice is served within that window.

Three layers sit on the balance sheet, and the second and third are where the litigation lives.

The first layer is the prepetition credit facility, a revolving facility with $30,000,000 of aggregate commitments maturing February 21, 2029 and secured by a first-priority lien on substantially all assets. As of the petition date, the debtors were obligors for not less than $17,916,002.34 plus accrued interest, fees, and expenses.

The second layer is the subordinated sponsor secured notes. Two promissory notes dated February 8, 2024 were issued in favor of two sponsor-affiliated funds, in original principal amounts of $5,000,000 and $42,000,000. Each accrues interest at 12 percent per annum, compounded annually, with interest capitalized and added to principal. As of the petition date, the smaller note carried a total outstanding balance of $7,954,818 and the larger carried $61,680,012, for a combined $69,634,830 against $47,000,000 of combined original principal. Both are purportedly secured by second-priority liens granted under second lien security agreements dated February 21, 2025, and both are subordinated in right of payment and lien priority to the prepetition credit facility under a subordination and intercreditor agreement. The word "purportedly" is the disclosure statement's own.

The third layer is the 11th Lane Unsecured Note, dated September 13, 2024, in an original principal amount of $17,000,000 and issued in favor of a sponsor affiliate. It is unsecured, and although papered as a promissory note, it is not reflected as a debt obligation on the debtors' balance sheet. The amounts advanced are carried on the books as an equity contribution.

The disclosure statement identifies two concerns with that note. First, the debtors are not in possession of any duly executed copy of the note or any amendment to it. Second, the debtors are in possession of an unsigned amendment dated November 26, 2025 alleging that one of the sponsor funds paid $1,952,362 to the noteholder on behalf of the debtor purchaser entity, reducing the note obligations from $17,000,000 to $15,047,638. The disclosure statement states the debtors' belief that the amounts ostensibly paid down were then added to the secured note held by that same fund, converting an equity investment into a secured debt obligation without the debtors' consent and with no consideration to the debtors.

Beginning in June 2025 and continuing through April 2026, the prepetition agent delivered notices asserting defaults and events of default under the credit agreement. The borrowing base was in an overadvance position, leaving the debtors with no available financing. Since December 2025, the prepetition lenders had been funding critical obligations such as payroll, lease payments, vendor payments, and payments to the third-party logistics provider in their permitted discretion, notwithstanding those defaults.

On April 27, 2026, after what the disclosure statement describes as repeated refusal by the sponsor to provide requested liquidity and capital support, the agent delivered a Notice of Exercise of Proxy Rights. Acting as proxy and attorney-in-fact under the prepetition collateral documents, the agent adopted a written consent removing the non-debtor intermediate holding company as sole member of the debtor purchaser entity and appointing an independent manager vested with sole and exclusive decision-making authority.

The sequence matters for how the plan is constructed. Newly constituted management, acting through replacement restructuring counsel, directed the sponsor and its affiliates to cease engaging with the debtors' customers, vendors, lenders, and other counterparties, and to cooperate with the transition, while demanding that the transition services counterparty continue performing. One day later, the notice of breach under the transition services agreement arrived. Six weeks after that, the cases were filed. The parties investigating the sponsor and the parties who removed the sponsor from control are aligned, and the plan's release architecture reflects that alignment.

The debtors ran a dual-track process. A liquidation consultant was retained prepetition, after soliciting proposals from four liquidation firms, to conduct liquidation sales of inventory, receivables, furniture, fixtures and equipment, and intellectual property. In parallel, a sales agent was engaged to market the business as a going concern and to conduct lender outreach for debtor in possession financing.

The sales agent contacted approximately 200 parties, 65 strategic and 135 financial, sent marketing materials, established a data room, and offered advisor and management calls. The bidding procedures order set July 1, 2026 as the stalking horse designation deadline, subsequently extended by notice to July 13, 2026. No stalking horse bidder was designated.

The plan carries the consequence of that timing on its face. The definition of Asset Purchase Agreement leaves the date blank. The definition of Sale Order leaves the docket number blank. The wind-down DIP draw that will fund the wind-down account is stated as a bracketed placeholder. Exhibit A, the liquidation analysis that supports the best interests test under section 1129(a)(7), is marked "To Come." The plan asserts in the body text that the analysis reflects a greater distribution to creditors than a hypothetical chapter 7 liquidation would produce. The exhibit supporting that assertion has not yet been filed.

The disclosure statement states that cash proceeds from a sale, if any, together with the liquidation process, will form the preliminary basis for distributions, augmented by monetization of other liquidating trust assets. The conditional phrasing is the debtors' own.

The plan places all claims and interests other than administrative claims, professional fee claims, DIP facility claims, and priority tax claims into nine classes. Classes 3, 4, and 5 vote. Classes 1 and 2 are unimpaired and deemed to accept. Classes 6 through 9 receive nothing and are deemed to reject, and the debtors state that they will seek confirmation as to those classes under the cramdown provisions of section 1129(b)(2)(B).

Each holder of an allowed claim in Classes 3, 4, and 5 receives a pro rata share of liquidating trust interests entitling the holder to a pro rata distribution of distributable value in accordance with the waterfall recovery. The waterfall runs in six steps: allowed administrative claims and allowed priority tax claims first, then allowed other secured claims, then allowed priority non-tax claims, then the allowed prepetition secured claim, then allowed subordinated sponsor secured note claims, and finally allowed general unsecured claims and allowed deficiency claims.

Two figures in the table deserve a closer look before voting. The Class 3 estimate of $7.9 million sits well below the not less than $17,916,002.34 that the disclosure statement reports as outstanding under the prepetition credit facility at the petition date. The plan does not reconcile the two figures in its narrative sections, and a holder evaluating relative position in the waterfall will want to understand what accounts for the difference, including paydowns from liquidation proceeds during the case and the interaction between the prepetition facility and the DIP facility under the final DIP order.

The Class 5 range spans just over $100 million. General Unsecured Claim is defined to include deficiency claims, and the plan provides that no subordinated sponsor note deficiency claim is counted in the aggregate amount of allowed general unsecured claims unless and until it has been finally determined by litigation or by a court-approved settlement. The general bar date of August 10, 2026 has not yet passed. Both variables cut in the same direction: the denominator against which each general unsecured creditor's pro rata share is calculated is not knowable today.

The plan's release architecture is built around a single defined term. Non-Released Party captures the equity sponsor, the noteholder affiliate, both sponsor funds holding the subordinated secured notes, two individuals, the seller entity under the Membership Interest Purchase Agreement, and the related parties of each of them other than the debtors. The definition then carves back in as released parties the independent manager, the chief restructuring officer, the debtors' professionals, and their related parties.

Every protective provision in the plan is drafted to fail as to that group. Non-released parties are excluded from the exculpation. They are excluded from the debtor releases. They are excluded from the opt-in third party releases, with the plan stating for the avoidance of doubt that no releasing party is deemed to have released any claim against a non-released party. They are excluded from the injunction, and the plan adds that no non-released party may assert or invoke any injunction, release, exculpation, or other protection under the article to bar, limit, or impair the prosecution of any retained cause of action against it.

The subject matter of the retained causes of action is identified in the body of the plan: the Carve-Out Transaction, transactions between the debtors and the transition services counterparty including the agreement itself, the subordinated sponsor secured notes, and the 11th Lane Unsecured Note. A non-exclusive schedule of retained causes of action will be filed with the plan supplement, in form and substance reasonably acceptable to the committee, seven days before the voting deadline.

The governance follows the money. The liquidating trustee is selected by the committee with the consent of the debtors and the DIP lenders. The trust oversight board has three members, two appointed by the DIP secured parties and one by the committee, with the plan naming the DIP agent and one of the DIP lenders as the two appointing parties on the lender side. The trust succeeds to the debtors' and the committee's privileges, and the plan states that sharing privileged information with the trust, the trustee, or board members does not waive those privileges given the joint and successor interest in investigating and prosecuting the claims. The trust receives the benefit of section 108 tolling.

The plan is candid about the risk. There is no guarantee that any retained cause of action will be prosecuted, no guarantee that any is viable as a matter of fact or law, and no guarantee that success would increase funds available for distribution. Expenses incurred investigating and prosecuting the claims may materially affect recoveries. No value has been ascribed to them.

Setting the non-released parties aside, the release package is conventional for a Delaware liquidating plan. The debtor releases run to the released parties and carve out claims determined by final order to have constituted fraud, gross negligence, or willful misconduct. The exculpation covers acts between the petition date and the effective date, subject to the same carve-out. The third party releases are opt-in only, requiring an affirmative election on a separate opt-in form circulated with the solicitation package. The plan does not discharge the debtors, consistent with section 1141(d)(3).

One provision is worth flagging for creditors evaluating the lender side of the structure. The released party definition provides that the inclusion of the prepetition lenders, the prepetition agent, the DIP lenders, and the DIP agent, along with their related parties, is subject to and limited by the challenge period and related provisions in the final DIP order. If a challenge is timely commenced and results in a final order sustaining it in whole or in part, those parties are not released with respect to the claims and causes of action that were the subject of the successful challenge.

The plan seeks limited substantive consolidation of the seven debtors' estates solely for voting and distribution purposes. On the effective date, assets and liabilities would be treated as if merged for those purposes, each claim would be deemed a single claim against a single obligor, and intercompany guarantees would be eliminated and canceled. The plan states that the consolidation would not otherwise affect the debtors' legal and corporate structures.

The plan applies the standard from In re Owens Corning, 419 F.3d 195 (3d Cir. 2005), which requires the proponent to prove either that prepetition the entities disregarded separateness so significantly that creditors relied on the breakdown of entity borders and treated them as one, or that postpetition their assets and liabilities are so scrambled that separating them is prohibitive and hurts all creditors.

The debtors offer three supporting propositions: that many creditors effectively treated the debtors as a single entity prepetition, that the business was operated as an integrated enterprise as a practical matter, and that the nominal assets held by certain debtors combined with the expense of separate plans make consolidation beneficial to creditors.

The second proposition is stated with a qualification that a party in interest may find useful. The plan says the debtors believe that while they did observe appropriate corporate formalities and separateness during the prepetition period, as a practical matter the business was operated as an integrated enterprise. Owens Corning treats mere administrative benefit as insufficient and characterizes consolidation as a rare remedy of last resort. Five of the seven debtors were formed for a transaction that never closed and, according to a footnote in the disclosure statement, never operated. Whether that fact supports consolidation or complicates it is a question the confirmation record will need to address.

This is a plan filed in advance of the events that will determine what it is worth. The confirmation hearing date, the objection deadline, the voting deadline, and the voting record date are all blank in the filed version, to be set by a solicitation procedures order on a motion filed contemporaneously with the plan. Interim approval of the disclosures for solicitation purposes and final approval at the combined hearing are both still ahead.

The claims objection deadline runs 180 days from the effective date, subject to extension. The trust must dissolve no later than five years from the effective date unless the court grants a fixed extension of up to three years on a timely motion. The plan sets a de minimis distribution threshold of $100, below which no distribution is made and the claim is forever barred against the trust assets.

For a creditor deciding how to vote, the analysis reduces to two questions that the filed document cannot answer. What will the sale and liquidation produce, and what are the claims against the sponsor worth net of the cost of prosecuting them. The plan is transparent that it cannot answer either one. It ascribes no value to the retained causes of action, states that their value is inherently unknowable and speculative, and reports every impaired class recovery as unknown. The plan supplement, the liquidation analysis, and the auction results are where those answers will begin to take shape.