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$80-million accord reached in Marvel suit

August 08, 2008|From Bloomberg News

Billionaire financier Ronald Perelman agreed to pay $80 million to settle a lawsuit in which he was accused of helping to divert $553.5 million in notes when he controlled comic book publisher Marvel Entertainment Group.

Perelman, 65, and other Marvel directors were accused of moving proceeds to some of his other companies before Marvel's 1996 bankruptcy. Note holders, and eventually Marvel's litigation trustees, sued in 1997, seeking $470.8 million in damages.

"The trustees believe that it would be irresponsible for them to reject the $80-million settlement offer," their lawyers said June 20 in federal court papers in Wilmington, Del. District Judge Sue Robinson scheduled a Sept. 11 hearing to consider approval of the deal.

"Defendants continue to deny any wrongdoing and wish to settle the action solely to avoid the burden, expense and uncertainty of continued litigation," according to the settlement agreement.

Some shareholders and unsecured Marvel creditors are among beneficiaries of the settlement fund, which will be worth about $50 million after payments including $25.9 million in legal fees, $2 million to pay off a loan and about $1 million in trustees' fees and administrative expenses, according to court documents.

Edward Friedman, a lawyer for the trustees, didn't immediately comment. Christine Taylor, a spokeswoman for Perelman and his MacAndrews & Forbes Holdings Inc., didn't immediately comment. Perelman is also chairman of cosmetics maker Revlon Inc.

The case has a convoluted history. In 2004 then-U.S. District Judge Kent A. Jordan ruled in favor of the directors and dismissed the suit. In 2005, the U.S. 3rd Circuit Court of Appeals in Philadelphia reversed that ruling and sent the case back to Wilmington for further proceedings.

The case was scheduled for trial Aug. 18 until mediation by U.S. Magistrate Judge Mary Pat Thynge led to the settlement, according to court records.

Marvel trustees alleged that Perelman and other directors caused the company to issue the notes in 1993 and 1994. "None of the proceeds went to Marvel or were used for Marvel's benefit," and instead directors unjustly enriched themselves, according to the appeal ruling.

Marvel, based in New York, emerged from bankruptcy in late 1998 as a unit of Toy Biz Inc., now part of Marvel Entertainment Inc., and note holders were never repaid, according to the appeals judges.

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