Case Study
Restructuring at Marvel

Prof. Ian Giddy, New York University

Bankruptcy and Restructuring at Marvel Entertainment Corp.  (HBS 9-298-059)

This case study pits shareholders (Perelman) against debtholders (Icahn) in 1997, shortly after Marvel, the leading comic book publisher in the United States, filed for Chapter 11 bankruptcy protection. It highlights equityholder/debtholder conflicts of interest in a situation of financial distress, illustrates the role of vulture investors, and hinges on how one approaches valuation of a company entering a restructuring plan.


1. Why did Marvel file for Chapter 11? Were the problems caused by bad luck, bad strategy, or bad execution?

2. Evaluate the proposed restructuring plan. Will it solve the problems that caused Marvel to file for Chapter 11? As Carl Icahn, the largest unsecured debtholder, would you vote for the proposed restructuring plan? Why or why not?

3. How much is Marvel's equity worth per share under the proposed restructuring plan, assumin it acquires Toy Biz as planned? What is your assessment of the pro forma financial projections and liquidation assumptions?

4. Will there be a "contagion effect," making it difficult for Marvel or other companies in the Perelman group to issue debt in the future? -