Marvel Case Study

3783 WordsFeb 25, 201016 Pages
Case Study of Bankrupt and Restructuring at Marvel Entertainment Group 1) Why is Marvel in financial distress? Bad luck? Bad strategy? Bad implementation? When possible, back your claims with numbers. There are several financial problems that compromise Marvel’s financial distress. Each problem can be explained by one or several reasons. • Over­collateral: The first financial problem of Marvel is that huge amount of shares are collateralized as its holding companies’ debts. These debts were secured by 77.3 million shares in total, accounting for 75.9% shares of Marvel as a whole. Issue Company Marvel Holding Inc. Marvel Parents Holding Inc. Marvel III Holding Inc. Amount ($ Million) 517.4 251.7 125 Due 1998…show more content…
b. Over‐aggressive for M&A. The merged companied also accounted for large portion of financial losses. c. Executive mistake. The executive team didn’t realize the motive of booming of this industry. And executives also neglected the necessity of core readers. 2) Why did Marvel file for Chapter 11 rather than restructure out‐of‐court? There are three main reasons that Marvel filed for Chapter 11: • Disagreement from active debt holders 2 Marvel offered a restructuring plan to reach an out‐of‐court agreement, but the debtors were not satisfied with it. The reasons of disagreement includes: a. Marvel was in serious financial distress and could not afford for a restructure plan favorable to bondholders. b. Bondholders, especially vulture investors expected for a large part of Marvel’s value. Their requirement directly went against shareholders and Perelman’s benefits. c. Who had the right to propose restructure plan. The holding companies’ debt holders thought that they should have the right to propose the first reorganization plan because of their ownership of collateral shares. d. Objection of the proposal about how to use the equity investment from Andrews. In the Perelman’s proposal, most of equity investment was used to acquire Toy Biz’s common share. However, the representative of debt holder, Carl Irans, disagreed with the acquisition. • Less bargain power for debt holders a.
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