Managers and the Legal Environment 7th Edition by David Madsen, Constance Bagley

Exercise 8

After Marvel Entertainment Group filed for bankruptcy protection under Chapter 11, tensions arose between several of the creditors. Eventually, one creditor acquired control of Marvel, thereby assuming the roles of DIP and creditor. The new DIP and the other creditors attempted to settle their claims against the estate, but negotiations broke down. The new DIP then commenced adverse litigation against the other creditors. The other creditors petitioned for the appointment of a trustee, arguing that the new DIP was incapable of neutrality. The district court appointed a trustee, and the new DIP appealed. Is acrimony between the DIP and certain creditors sufficient cause to justify appointment of a trustee? [In re Marvel Entertainment Group, Inc., 140 F.3d 463 (3d Cir. 1998).]