April 4, 2014
(Editor’s Note: This post is an excerpt from an article appearing in Practitioner Insights on WestlawNext)
Stan Lee Media Inc. has asked the U.S. Supreme Court for support in its so-far unsuccessful battle to recover intellectual property rights to the character Conan the Barbarian that were transferred during the company’s bankruptcy.
Stan Lee Media Inc. v. Conan Sales Co. LLC et al., No. 13-1141, petition for cert. filed, 2014 WL 1154187 (U.S. Mar. 19, 2014).
Shareholders of the entertainment company say they were entitled to receive notice and an opportunity to oppose the proposed transfer to a creditor of the stock of a holding company that owned Conan-related intellectual property.
They also say the 9th U.S. Circuit Court of Appeals’ decision upholding the transfer conflicts with decisions from other circuit courts.
According to the petition, SLMI was “founded by comic book icon Stan Lee to conceive, create, co-create and produce marketable characters and story franchises for entertainment, merchandising and promotional exploitation worldwide.”
In 2001 SLMI filed for Chapter 11 bankruptcy reorganization in the U.S. Bankruptcy Court for the Central District of California.
Before filing its bankruptcy petition, SLMI had acquired from Conan Sales Co. LLC all the issued and outstanding stock of Conan Properties, which held the intellectual property rights to the Conan the Barbarian character, the petition says.
In exchange, CSC received shares of SLMI stock, valued at $4.3 million, and a promise that SLMI would make a contingent payment if the stock’s daily trading volume slipped below 100,000 shares after 18 months of the deal’s closing, according to the petition.
The trading volume of SLMI’s stock fell below the target because of SLMI’s bankruptcy, so CSC filed a creditor’s claim seeking the contingent payment.
To settle CSC’s claim, the unsecured creditors’ committee agreed to transfer the Conan Properties stock back to CSC in exchange for $275,000, the petition says. SLMI shareholders claim they never received notice of the proposed sale or an opportunity to oppose it.
The Bankruptcy Court approved the settlement in 2002, and SMLI’s bankruptcy case was dismissed in December 2006, the petition says.
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