In re Marvel Entertainment Group, Inc. v. Chase Manhattan Bank
United States District Court for the District of Delaware
209 B.R. 832 (1997)
Marvel Entertainment Group (debtor) was 80% owned by three holding companies collectively called Marvel Holdings, which had raised $894 million in bonds secured by 80% of Marvel's stock and all of two of the three Marvel Holdings companies' stock. Marvel and Marvel Holdings filed separate chapter 11 reorganizations the same day. In the Marvel Holdings case, the bondholders committee got the automatic stay lifted and foreclosed on the Marvel shares securing their bonds, becoming Marvel shareholders themselves, then announced plans to vote those shares to replace Marvel's board. Marvel sought a restraining order and injunction to stop the vote, and the bankruptcy court ruled the bondholders needed to seek relief from Marvel's own automatic stay before voting the shares; the bondholders appealed to the district court.
Whether, absent clear abuse, the bankruptcy code's automatic stay prevents shareholders from exercising ordinary corporate governance rights.