The hearing before US district court judge Roderick McKelvie was driven by the battle between Chase Manhattan Bank and investor R Carl Icahn, whose attorney valued Icahn's latest buyout offer for Marvel assets at up to $525 million. Chase, as agent for a group of banks with about $700 million in secured loans, has rejected Icahn's offer as too conditional and supports a reorganisation plan under which Marvel would merge with Toy Biz Inc.

The court-appointed trustee overseeing the company's assets during bankruptcy, John Gibbons, favours the Toy Biz plan and urged McKelvie to approve a settlement resolving litigation that has temporarily frozen consideration of that plan. But McKelvie said he was "uncomfortable ruling from the bench" after hearing nine hours of testimony that included gruelingcross-examination of Gibbons by shareholder attorney Gary Schildhorn and Icahn attorney Edward Weisfelner who sought to prove that a settlement now was premature.

Chase vice president Susan Atkins testified she valued the Icahn offer at 70 cents on the dollar and the Toy Biz merger at the high end of a 65 to 82 cent value range. Testimony by investment bankers William Peluchiwiski and Robert Martin turned on how they valued such factors as Marvel's licenses, the debt of its Fleer, Panini and Sky Box subsidiaries, and the trading value of the proposed merged company's new stock. Atkins estimated it would trade between $8.40 and $12.45 a share.

The bankruptcy, which was filed in December 1996 by former Marvel chairman Ronald Perelman, has been marked by bitter debates between attorneys for Icahn and for Chase. Last year Icahn and his partner, Vincent Intrieri, became chairman and vice-chairman of Marvel after Icahn took control from Perelman by foreclosing on Marvel shares that secured his bonds forMarvel's parent.

"At any time we're ready to sit down and get (the asset purchase) done. The offer is still there today," Intrieri testified. Intrieri's testimony revealed that Icahn's High River L Powns 71.4 per cent and Intrieri's Westgate International LP owns 28.6 per cent of about $300 million face value in the parent company's bonds bought for 19 cents on the dollar, and about $60 million face value in secured bank debt.

McKelvie promised to rule as soon as possible on the settlement and said the confirmation hearing to consider the merger reorganisation would run from June 30 through July 2.