Marvel Ready to Drop Chapter 11 or Liquidate

Marvel Entertainment Group Inc. said negotiations with lenders over a bankruptcy reorganization plan have stalled and it is preparing to either come out of bankruptcy on its own or liquidate. Marvel has been in rancorous talks with its lenders and toy maker Toy Biz for months over a plan to rescue the comic book publisher from Chapter 11. Those talks have now run into “significant difficulties,” company officials said in a statement. The company’s attorneys told U.S. Bankruptcy Judge Helen Balick in a letter that if they can’t get her approval for an interim loan to keep the company afloat, they’ll either withdraw Marvel’s Chapter 11 status or convert the case to a Chapter 7 liquidation. In the letter sent to Balick, Marvel attorney Laura Davis Jones said she’ll file the motion to dismiss or convert the case today. Marvel and its units need Balick to approve a $125-million loan if they are to survive through the end of the month, Jones said. If Marvel officials decide to drop Chapter 11 protection, its banks, owed more than $610 million, would be free to foreclose on Marvel’s assets in state court.