Bankruptcy and Restructuring at Marvel Entertainment Group

Benjamin C. Esty; Jason  Auerbach

Case | HBS Case Collection | September 1997 (Revised August 2007)

Bankruptcy and Restructuring at Marvel Entertainment Group

Abstract

Marvel Entertainment Group is the leading comic book publisher in the United States, with superheros like Spider-Man, the Incredible Hulk, the X-Men, and Captain America. It is also one of the leading manufacturers of sports and entertainment trading cards under the Fleer and Sky Box brand names. In the mid-1990s, it experienced sharp declines in both businesses, causing it to file for bankruptcy in December 1996. This case is set in late January 1997, shortly after Marvel filed its reorganization plan with the bankruptcy court and approximately one month before creditors will have to vote on the plan at the confirmation hearing. Two of the most prominent corporate raiders of the 1980s are pitted against each other for control of the company. On one side is Ronald Perelman, who controls Marvel through his MacAndrews & Forbes holding company. On the other side is Carl Icahn, who controls 25% of Marvel's public debt. Icahn and the other bondholders must decide whether to accept Perelman's plan, to reject it in favor of their own plan, or to sell their bonds before the confirmation hearing. Perelman must decide whether to change the plan in response to the debtholders' threats or to wait and see what happens at the hearing. A rewritten version of another case.

Keywords: Restructuring; Decision Choices and Conditions; Borrowing and Debt; Insolvency and Bankruptcy; Governance Controls; Courts and Trials; Planning; Entertainment and Recreation Industry;

Format: Print

19 pages

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Citation:

Esty, Benjamin C., and Jason Auerbach. "Bankruptcy and Restructuring at Marvel Entertainment Group." Harvard Business School Case 298-059, September 1997. (Revised August 2007.)

In August 2017, MoviePass dramatically lowered its subscription price from $50 per month to just $10 for up to one movie per day. The idea was to rapidly scale the business to the point where they could generate incremental revenue streams form related businesses (e.g., a share of ticket and concession revenues from theaters, advertising revenue from movie studios; and revenue from ride-sharing companies). Within two days, Moviepass had gotten 150k new subscribers; within six months, they had more than 2 million. But as of February 2018, the company faced three challenges: theaters were resisting the concept, investors were shorting the stock in record numbers, and competitors were beginning to appear. Could CEO Lowe convince investors that they did, indeed, have a viable business model and could monetize their growing subscriber base? At the same time, Lowe had to decide whether to raise subscription prices to cover the growing losses or keep prices low to attract subscribers as quickly as possible.

After losing market share to low-priced competitors such as Harry’s and Dollar Shave Club for several years, Gillette decided to fight back by cutting prices on its razors and blades in April 2017. Bonnie Herzog, an equity analyst at Wells Fargo, must assess how the recently announced price cuts are likely to affect Gillette’s earnings and its parent company’s earnings (Procter & Gamble owns Gillette). As part of her analysis, Herzog must estimate the price elasticity of demand for Gillette’s razors and blades. The case contains scanner data which allows students to calculate both price elasticities for a sample of Gillette products.

Case | HBS Case Collection | November 2019

Hapag-Lloyd AG: Complying with IMO 2020

Benjamin C. Esty, Mette Fuglsang Hjortshoej and Emer Moloney

A new environmental regulation known as IMO 2020 was creating what one industry analyst called “the biggest shakeup for the oil and shipping industries in decades.” According to the new regulation, all ocean-going ships would have to limit their sulfur emissions by January 1, 2020. Senior leaders at Hapag-Lloyd, one of the world’s largest shipping companies, were evaluating three ways their ships could comply with the new regulation: use low-sulfur fuel, use high-sulfur fuel but install scrubbers to clean the exhaust, or convert ships to use liquid natural gas (LNG) as fuel. Each of the options had its advantages and disadvantages, and the most attractive option depended on not only the values of key parameters (e.g., future fuel prices and equipment costs), but also the strategies adopted by the owners of the other 60,000 ocean-going ships subject to the regulation. For the industry as a whole, annual compliance could cost as much as $60 billion; for Hapag-Lloyd, annual compliance might cost as much as $1 billion or more. For a company with net income of $34 million (€28 million) in the prior year, and losses in two of the past four years, getting this decision right was of the utmost importance. Senior executives at Hapag-Lloyd had created a proposed compliance plan and were scheduled to present it to the firm’s supervisory board for approval in June 2018. Whether the team had the right plan and whether the board would approve it are the key questions in the case.

Keywords: Valuation; Ship Transportation; Strategic Planning; Game Theory; Pollutants; Supply Chain; Corporate Accountability; Capital Budgeting; Environmental Sustainability; Governing Rules, Regulations, and Reforms; Governance Compliance; Shipping Industry; Transportation Industry; Germany;

Citation:

Esty, Benjamin C., Mette Fuglsang Hjortshoej, and Emer Moloney. "Hapag-Lloyd AG: Complying with IMO 2020." Harvard Business School Case 220-003, November 2019. View Details

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Bankruptcy and Restructuring at Marvel Entertainment Group

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