Marvel Entertainment Group
Marvel Entertainment Group
Question 1
Filling Chapter 11 could help Marvel to commence the restructuring plan in a more smoothing pattern. As Marvel was a highly leveraged company with a significant number of dissenters, bondholders and vulture investor including Carl Icahn would not easily agree on the restructuring plan. Under Chapter 11, reorganization plan will bind dissenting creditors and shareholders to arrive at an agreement easier. In fact, upon the filing of a Chapter 11, an
“automatic stay” enabled Marvel to prevent Carl Icahn to commence an alternative restructuring plan consisting of a $350 million cash infusion through a rights offering.
As
additional funding is normally difficult to obtain in the situation of financial crisis of the debtor, a debtor may often find it easier to obtain access to additional financing in conjunction with a Chapter 11 than in an out-of-court restructuring. Bankruptcy Code allows a debtor to obtain secured or unsecured credit on a superior basis, meaning that the claims of the Debtor In Possession (DIP) lender have the priority before other creditors subject to certain carve-outs for professional and other fees. After filing chapter 11, Marvel became qualified for DIP financing. Marvel filed for Chapter 11 bankruptcy because it offers strong protection to the company, so that they may continue to operate while restructuring their debts. Chapter 11 allows Marvel to have sufficient liquidity to pay all current and expected trade and employee obligations and to fulfill all of its operating and investment needs during the reorganization process. It provides Marvel the opportunity to reorganize its debt and to re-emerge as a healthy organization.
We believe that Marvel’s problems were caused by bad strategy. Failing to capitalize on the speculative frenzy of collectors by increasing the number of monthly titles dramatically, collectors stopped to buy comics from Marvel after failing to realize
Question 1
Filling Chapter 11 could help Marvel to commence the restructuring plan in a more smoothing pattern. As Marvel was a highly leveraged company with a significant number of dissenters, bondholders and vulture investor including Carl Icahn would not easily agree on the restructuring plan. Under Chapter 11, reorganization plan will bind dissenting creditors and shareholders to arrive at an agreement easier. In fact, upon the filing of a Chapter 11, an
“automatic stay” enabled Marvel to prevent Carl Icahn to commence an alternative restructuring plan consisting of a $350 million cash infusion through a rights offering.
As
additional funding is normally difficult to obtain in the situation of financial crisis of the debtor, a debtor may often find it easier to obtain access to additional financing in conjunction with a Chapter 11 than in an out-of-court restructuring. Bankruptcy Code allows a debtor to obtain secured or unsecured credit on a superior basis, meaning that the claims of the Debtor In Possession (DIP) lender have the priority before other creditors subject to certain carve-outs for professional and other fees. After filing chapter 11, Marvel became qualified for DIP financing. Marvel filed for Chapter 11 bankruptcy because it offers strong protection to the company, so that they may continue to operate while restructuring their debts. Chapter 11 allows Marvel to have sufficient liquidity to pay all current and expected trade and employee obligations and to fulfill all of its operating and investment needs during the reorganization process. It provides Marvel the opportunity to reorganize its debt and to re-emerge as a healthy organization.
We believe that Marvel’s problems were caused by bad strategy. Failing to capitalize on the speculative frenzy of collectors by increasing the number of monthly titles dramatically, collectors stopped to buy comics from Marvel after failing to realize