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MARVEL FILES MULTI-COUNT LAWSUIT AGAINST PERELMAN, CHASE AND OTHER BANKS, AND TOY BIZ' PRINCIPALS ALLEGING RESPONSIBILITY FOR MARVEL'S FINANCIAL COLLAPSE
NEW YORK, OCTOBER 30, 1997 —
Action Seeks To Allow Marvel To Take Control of Toy Biz Board, Strip Banks of Collateral, Subordinate Bank Claims, and Assess Money Damages Against Perelman and Others Based On Alleged Improper and Collusive Scheme. Company Files Motion for TRO To Prevent Purported Toy Biz Board. From Acting; Seeks Removal of Marvel Bankruptcy Case To U.S. District Court.
Marvel Entertainment Group (NYSE:MRV) announced today that it has filed a multi-count complaint in the U.S. District Court in Delaware against Ronald Perelman, Chase and other banks, and Toy Biz's principal shareholders Avi Arad and Isaac Perlmutter alleging responsibility for Marvel's financial collapse. Also named in the complaint is New York fund manager Mark Dickstein of Dickstein Partners. Marvel is currently under Chapter 11 bankruptcy protection commenced by former management, under the direction of Perelman and his affiliates.
The lawsuit seeks to allow Marvel to take control of the Toy Biz Board of Directors, to strip the banks of their collateral and to otherwise subordinate the banks' claims, and to assess money damages against Perelman and others based on an alleged improper and collusive scheme. Simultaneous with the lawsuit filing, Marvel — which owns approximately 78% of the voting shares of Toy Biz — filed motions for a temporary restraining order (``TRO'') to prevent the purported Toy Biz Board from taking any further action and, separately, for removal of the Marvel Chapter 11 bankruptcy case to the U.S. District Court in Delaware.
Marvel's Chairman of the Board, Carl C. Icahn, stated, "While we did not want to resort to litigation, we felt that it was imperative that we stop Toy Biz's improper actions and resolve other uncertainties that are hovering over our Company in order to stop the current downward spiral." Icahn added, "We feared that the exodus of personnel that Marvel has suffered since rumors of Toy Biz's purported merger proposal surfaced would continue unless we took this decisive action to address past improper conduct and to enable Marvel to move toward a reorganization plan that will allow us to emerge from Chapter 11 and restore this great Company."
The complaint alleges, among other things, that Perelman, with the active cooperation of his affiliates, improperly (i) transferred Marvel's toy licensing rights to Toy Biz in 1993; (ii) over-leveraged Marvel's parent holding companies; (iii) undertook a number of ill-fated and expensive acquisitions that were detrimental to the Company; (iv) pledged the Company's assets to support previously unsecured loans; and (v) orchestrated
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