Marvel Case Study
CASE SEMINAR CORPORATE FINANCE
Marvel Enterntainment Group
Bankruptcy and Restructuring
May 20, 2013
Audrey Huai Kuan Khoo Chen-Fong Lin Marcin Sadowski Hasmik Saturyan
Question 5 (Homework) As a public debt holder, would you vote for or against the proposed restructuring plan? Why, or why not? How would you expect Carl Icahn and the other secured and unsecured creditors of Marvel to vote? Hint: What options do public debt holders have, and how much would they gain under each alternative? There are three alternatives from the perspective of a public debt holder: 1. Selling their bonds straight away; 2. Voting in favor of the Perelman’s reorganization plan; 3. Voting against the Perelman’s reorganization plan and enforcing Carl Icahn’s initial reorganization plan from December 10, 1996; Chapter 7 – liquidation. As soon as Marvel’s management files a petition for relief with a bankruptcy court an automatic stay goes into effect. Marvel’s management then continues running the company and has the exclusive right to propose a reorganization plan within 120 days. This plan will be voted on by all the claimants and if at least ½ of them vote in favour of the reorganisation plan, it is accepted. If the plan is not accepted within 180days, creditors can propose their own reorganization plan or choose to liquidate the company as seen in the last option mentioned above. In case of the first option being realised, public debt holders sell their bonds at then (31/1/1997) prevailing prices (Exhibit 6). Face value ($ millions) Marvel Holdings Marvel Parent Holdings Marvel III Holdings 517.4 251.7 125.0 Market Market price on value 1/31/97 ($) ($ millions) 0.175 90.545 0.14 0.139 35.238 17.375 Collateral shares (millions) 48.0 20.0 9.3 Value per collateral share ($) 1.886 1.762 1.868
Table 1. Payoffs in case of selling bonds.
The value per collateral share can be calculated by dividing the market value of the share by the number of collateral shares. In this
Marvel Enterntainment Group
Bankruptcy and Restructuring
May 20, 2013
Audrey Huai Kuan Khoo Chen-Fong Lin Marcin Sadowski Hasmik Saturyan
Question 5 (Homework) As a public debt holder, would you vote for or against the proposed restructuring plan? Why, or why not? How would you expect Carl Icahn and the other secured and unsecured creditors of Marvel to vote? Hint: What options do public debt holders have, and how much would they gain under each alternative? There are three alternatives from the perspective of a public debt holder: 1. Selling their bonds straight away; 2. Voting in favor of the Perelman’s reorganization plan; 3. Voting against the Perelman’s reorganization plan and enforcing Carl Icahn’s initial reorganization plan from December 10, 1996; Chapter 7 – liquidation. As soon as Marvel’s management files a petition for relief with a bankruptcy court an automatic stay goes into effect. Marvel’s management then continues running the company and has the exclusive right to propose a reorganization plan within 120 days. This plan will be voted on by all the claimants and if at least ½ of them vote in favour of the reorganisation plan, it is accepted. If the plan is not accepted within 180days, creditors can propose their own reorganization plan or choose to liquidate the company as seen in the last option mentioned above. In case of the first option being realised, public debt holders sell their bonds at then (31/1/1997) prevailing prices (Exhibit 6). Face value ($ millions) Marvel Holdings Marvel Parent Holdings Marvel III Holdings 517.4 251.7 125.0 Market Market price on value 1/31/97 ($) ($ millions) 0.175 90.545 0.14 0.139 35.238 17.375 Collateral shares (millions) 48.0 20.0 9.3 Value per collateral share ($) 1.886 1.762 1.868
Table 1. Payoffs in case of selling bonds.
The value per collateral share can be calculated by dividing the market value of the share by the number of collateral shares. In this