In Re Marvel Entertainment Group v. Chase Manhattan Bank

209 B.R. 832 (1997)

Purchase the Printed Copy at bsmsphd.com

Nature of the Case

To access this section all you need to do is click here and register.

Facts

The following facts are drawn from the parties' briefs and the record of proceedings below. Almost 80% of P's common stock is owned or controlled by three holding companies: Marvel Holdings, Inc., Marvel (Parent) Holdings, Inc., and Marvel III Holdings, Inc. All three holding companies are owned by Ronald O. Perelman. The balance of P's common stock is held by public stockholders (18.84%) and entities owned or controlled by Perelman (2.35%). The Marvel Holding Companies raised $894 million through the issuance of bonds. The bonds were issued pursuant to three separate indentures and were secured by a pledge of approximately 80% of Marvel's stock and by 100% of the stock of Marvel (Parent) and Marvel Holdings. An indenture trustee, LaSalle, was appointed to act for the bondholders under the indentures. On December 27, 1996, P filed Chapter 11. On the same day, the Marvel Holding Companies also filed Chapter 11. A Bondholders Committee was formed in the Marvel Holding Companies' cases to represent parties currently holding the bonds. LaSalle filed several proofs of claims against P on behalf of the bondholders. On January 13, 1997, the Bondholders Committee and LaSalle moved to lift the automatic stay to allow them to foreclose on and vote the pledged shares of stock as a result of the Holding Companies' default under the indentures. The court listed the stay. On March 19, 1997, the Bondholders Committee and the Indenture Trustee notified P of the intent of the bondholders and the Indenture Trustee to vote the pledged shares to replace P's board of directors. P filed a complaint for declaratory and injunctive relief and a motion for a temporary restraining order and a preliminary injunction enjoining the bondholders and the Indenture Trustee from voting the pledged shares to replace the board of directors. Also on that day, D, as agent for the senior secured lenders in the Debtors' cases, commenced a similar adversary proceeding seeking substantially the same relief. The court held that § 362(a)(3) prevented the bondholders and the Indenture Trustee from voting the pledged shares to replace Marvel's board of directors until they first sought and obtained relief from the automatic stay pursuant to § 362(d). This appeal resulted.