LIV Golf is using Chapter 11 to garner support from enough of its professional golfers to hand over the league after its ultimate equity owner, The Public Investment Fund of the Kingdom of Saudi Arabia, (PIF) announced that it would discontinue funding LIV’s operations after the end of the 2026 season. BC Partners Advisors is supporting the effort and entered into a restructuring support agreement (RSA) with LIV Golf and its affiliated debtors that lays out the road map for a revamped version of the professional golf association under a new operating model (LIV 2.0).

To pull it off, LIV will need to get both PIF and a certain number of its professional golfers to enter into an RSA acceptable to BC Partners within 35 days of the bankruptcy filing. Failing that, the debtors will wind down their estates through a liquidating trust. If enough players sign on, BC Partners and any additional new investors will end up owning 45% of the reorganized LIV Golf, participating players will own 52.5%, and the remaining 2.5% of equity will be set aside for distribution to management under a management incentive plan.

Under the RSA between LIV Golf and BC Partners, which will act as the plan sponsor, LIV must reach a deal with players (i.e., – independent contractors who participate in golf events presented by the debtors) holding eligible claims that equal or exceed 2/3 in amount and 1/2 in number of such claims held by all players. Eligible claims are those that arise out of a player participation agreement, player license and service agreement, or any other agreement governing the relationship between a player and/or its affiliates, on the one hand and the debtors on the other. These players likely will include some of the following individuals identified as the debtor’s top 20 unsecured creditors.

Protecting the NOLs – tax law 101

In addition to bringing additional parties on board, LIV Golf also must protect what David Orlofsky, the company’s Chief Restructuring Officer, considers one of the league’s most valuable assets – its net operating losses, or NOLs. Since its inception, LIV Golf has run at a loss, generating approximately USD 3bn in NOLs at LIV Golf Inc and approximately USD 2bn at LIV Golf Ltd, for a total of approximately USD 5bn as of 31 December 2025.[1]

Source: First Day Declaration of David Orlofsky

LIV Golf, Inc is the common parent of an affiliated group of corporations that files a consolidated US federal income tax return. Substantially all of the tax attributes are attributable to LIV Golf, Inc which is the “old loss corporation” for purposes of section 382 of the Internal Revenue Code of 1986 (the US Tax Code). The company’s tax attributes include the debtors’ US federal net operating loss carryforwards (the NOLs), carryforwards of disallowed business interest expenses under section 163(j) of the Tax Code, and other tax benefits. The debtors expect to generate amounts of tax attributes in the 2026 taxable year.

The tax attributes are valuable assets of the debtors’ estates because the Tax Code generally allows a corporation to carry forward its NOLs to reduce taxable income, thereby reducing the corporation’s future tax liability.[2] According to Orlofsky, “absent any existing or intervening limitations and depending on future operating results,” the tax attributes could significantly reduce the debtors’ current and future US federal income tax liability, including by offsetting any taxable income that may result from transactions completed in connection with a Chapter 11 plan. The tax attributes could therefore translate into future tax savings over time that could substantially enhance the debtors’ value and contribute to their restructuring efforts.

The debtors’ ability to use the tax attributes to reduce future tax liability is not unlimited. Section 382 of the Tax Code limits the amount of US federal taxable income that can be offset by a corporation’s NOL carryforwards once that corporation has undergone an “ownership change,” which under the Tax Code generally occurs when the percentage of a corporation’s equity held by one or more of its 5% shareholders increases by more than 50 percentage points above the lowest percentage of the corporation’s equity owned by that shareholder at any time during the relevant testing period, which is typically three years.

Because LIV Golf is contemplating a debt-for-equity plan, under which it would issue new common stock (or rights to receive or acquire such common stock) to creditors as distributions on their claims, it is expected that such issuance and distribution would result in an ownership change that would adversely affect the availability and value of the debtors’ tax attributes. As a result, the debtors seek to avail themselves of, and expect to qualify for, an exception contained in the Tax Code for changes in ownership under a confirmed Chapter 11 plan. The debtors may not qualify for that exception if the trading, transfer, and accumulation of prepetition claims is left unrestricted.

To protect the NOLs, the debtors filed a motion (NOL motion) seeking a bankruptcy court order restricting the transfer of certain claims against the debtors that could impair their ability to qualify for the Tax Code’s Chapter 11 plan exception. In the motion, LIV Golf asked the bankruptcy court to approve notification and hearing procedures for transfers of certain claims held by players, former players, and other participants or contractors associated with LIV Golf. According to the proposed procedures, holders of such claims who meet specified ownership thresholds must provide advance notice before transferring their claims, and the debtors must have an opportunity to object to transfers that could jeopardize their tax attributes. The debtors also requested that any transfer of such claims made in violation of the procedures would be deemed null and void as a violation of the automatic stay. The bankruptcy court approved the motion on an interim basis on 10 September and has scheduled a 7 October hearing to consider approval on a final basis.

Sponsoring the event

With approximately USD 15m in cash on hand as of the petition date, PIF has agreed to provide an up to USD 49.6m DIP term loan facility, with LIV Golf, Inc as the borrower. On 4 June 2026, PIF provided a USD 495m term loan to the debtors, which matures on 31 December 2026. That term loan will be rolled-up into the DIP facility in an aggregate principal amount equal (on a dollar-for-dollar basis) to the aggregate amount of the new money DIP term loan facility. The DIP loan will have a 12% annual interest rate and mature 120 calendar days after the bankruptcy filing. LIV Golf Investments Ltd, LIV Golf Holdings, Ltd, and each of the other debtors will guarantee the DIP loan. The DIP loan does not come with any upfront, commitment, backstop, exit, or similar fees. However, the debtors will pay the fees of PIF’s professionals, White & Case and FTI Consulting. The DIP credit agreement contains several milestones, including that the debtors must file a Chapter 11 plan that is acceptable to PIF within 30 days of the petition date.

In addition to the PIF DIP financing, BC Partners agreed to provide up to USD 30m in supplemental, postpetition, new-money financing that will be directed to start-up costs of the LIV 2.0 transaction rather than to fund the debtors’ operations and the administration of the Chapter 11 cases. For providing the loan, BC Partners will receive a 10% upfront premium, a 10% repayment premium, and an agency fee in an undisclosed amount. The loan will mature within 30 days of closing and may be refinanced and repaid on a dollar-for-dollar basis by loans under an exit term loan facility to be entered into by the reorganized debtors. The new money commitments of the BC Partners DIP lenders under such exit term loan facility will be reduced on a dollar-for-dollar basis by amounts funded under the DIP facility, however any such reduction in respect of amounts funded to pay plan sponsor fees and expenses will not exceed USD 4m in the aggregate.

If PIF becomes a party to the RSA, at the election of the BC Partners DIP lenders, all BC Partners DIP loans and commitments may be repaid and refinanced or replaced (on a cashless basis) by a separate tranche of loans and commitments under the PIF DIP facility (the Class B PIF DIP Loans and Class B PIF DIP Commitments), with the terms and conditions (including any fees and economics) of such Class B PIF DIP Commitments and DIP Loans to be mutually agreed.[4] As discussed below, the DIP loans will either be repaid in cash or rolled up into the exit term loan.

The game plan and recoveries

Under the restructuring agreed to in the RSA, LIV Golf, Inc (LIV Holdco) will be the reorganized company and the entity in possession of the NOL balances, while LIV 2.0 and LIV Team Holdings will operate as subsidiaries.

Under the restructuring contemplated by the RSA, to which PIF must become a party, PIF will no longer have an ownership interest in the debtors. Its funded debt and equity will be cancelled and extinguished in exchange for releases and it will receive no economic distribution on account of such debt and equity.

Players who provide mutual releases to all parties and sign certain settlement agreements will receive equity in LIV Holdco sufficient to qualify for the tax treatment discussed above and rights to acquire additional equity in LIV Holdco to achieve their 52.5% common equity stake. Also, players who agree to play in LIV 2.0 will receive amended contracts subject to future services to be delivered to LIV, including signing bonuses, return of certain NIL[3] rights and, on average, aggregate player ownership of approximately 30% in the teams. Approximately 2.5% of the new common equity will be reserved for distribution under a management incentive plan.

The RSA does not provide for the treatment of claims asserted by players who do not sign settlement agreements. On 8 September, the date of the bankruptcy filing, the debtors moved to reject contracts with their players. Rejection of the contracts would leave players with general unsecured claims for rejection-based damages. As most (if not all) distributions appear to be in the form of common equity, which has been fully allocated, it would not appear that there would be any meaningful recoveries on such rejection claims. This arguably could incentivize more players to reach a deal with the league, particularly if returning to the PGA is not an option for them. Moreover, while players will ultimately hold 52.5% of the reorganized company’s common equity, it is unclear how this amount would be divided among individual players. Presumably, the more valuable players would be given larger stakes in the company.

In terms of the reorganized debtors’ capital structure, on the plan’s effective date, LIV Holdco will issue a USD 127.5m five-year term loan secured by a first lien on all assets of LIV Holdco and all subsidiaries, including, but not limited to, LIV 2.0. The term loan will come with a 2% upfront payment and a 2% exit payment. As noted above, any DIP loans held by BC Partners and any other investors approved by BC Partners, and any Class B PIF DIP Loans that repay or refinance BC Partners’ DIP loans (on a cashless basis), that are not otherwise repaid in cash on or before the plan’s effective date will be rolled into the exit term loans and reduce the amount of new capital funded under the term loans by the DIP investors.

Affiliated funds of BC Partners and co-investors will provide the exit term loan, although other investors acceptable to BC Partners and the company (collectively, Investors) will be offered the opportunity to co-invest in a pro-rata strip across term loan, senior preferred equity, and convertible subordinated preferred equity. Any non-pro-rata co-investment will be subject to BC Partners’ approval.

LIV Holdco will issue USD 147.5m in senior preferred equity to the Investors, and preferred equity holders will receive warrants to purchase the number of shares of common stock equivalent to 10% of LIV Holdco at a price per share of USD 0.01. LIV Holdco will also issue USD 25m in convertible subordinated preferred equity to the Investors. Such equity will be convertible into 30% of LIV Holdco at a price per share equivalent to the price per share of common equity issued to players and management.[5]

The RSA further provides that BC Partners will have the exclusive right to purchase one expansion team of LIV 2.0, or any successor league, for USD 1 at any time following the introduction of two LIV 2.0 expansion teams post-emergence and at the discretion of the investors, with such team eligible to be constituted with players and to compete in LIV 2.0, or any successor league, beginning with the first tournament following such constitution. This right will expire in 10 years from the closing of the transaction.

Investors will also receive 2% of revenues generated by LIV 2.0, or any successor league, for a period of seven years beginning when LIV 2.0 achieves profitability, as determined by the board, subject to a mutually agreed upon buyout formula.

In terms of governance, LIV Holdco will be governed by a seven member board comprised of three board members designated by BC Partners, three board members designated by the players and management, one of whom will be the then CEO of LIV Holdco, and one independent member. This would give the players a near equal say to BC Partners (though slightly less because they would share their board member rights with management) in how LIV 2.0 is run. Board member control, coupled with a 52.5% stake in the company will certainly afford the players a larger voice in LIV 2.0, particularly to the extent that they are well organized and coordinated.

Prior to joining Debtwire, Sara was a law clerk to two judges in the United States Bankruptcy Court, S.D.N.Y. and practiced in the Financial Restructuring Group at Clifford Chance, where she represented financial institutions (as secured and unsecured creditors, defendants in adversary proceedings, and participants in DIP financings) in high-profile restructurings. She also represented foreign representatives in Chapter 15 cross-border cases.

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[1] These amounts also include approximately USD 2bn of losses carried forward by debtor LIV Golf Ltd for United Kingdom tax purposes.

[2] See 26 U.S.C. §§ 163(j) and 172.

[3] Although not defined, we assume that NIL refers to name, image, and licensing rights.

[4]  The Class B PIF DIP Loans and Commitments must include (i) conditions to funding and covenants that are specified in the BC Partners DIP term sheet, (ii) a class vote on all matters requiring the consent of the requisite lenders under the PIF DIP facility, (iii) separate indemnification and expense reimbursement for the lenders providing such Class B PIF DIP Loans and Class B PIF DIP Commitments (including all documented fees and expenses of advisors to such lenders), and (iv) provisions providing for the seniority in lien and payment priority of the Class B PIF DIP Loans to the other loans under the PIF DIP facility.

[5] Upon any liquidation, dissolution, sale, or deemed liquidation event (including merger, acquisition, or sale of substantially all assets), preferred equity will have a liquidation preference senior to the common stock. Any remaining proceeds following that liquidation preference would be distributed to holders of preferred equity and common stock on an as-converted basis.