Third Time's the Harm
Heading into Wrestlemania XII, Bret "The Hitman" Hart was the defending World Wrestling Federation Champion, a title he had claimed from "Big Daddy Cool" Diesel at Survivor Series 1995 (in a No Disqualification match that's probably overdue for its own feature here).
In the intervening four months between winning his third championship and putting the belt on the line against HBK, Bret bled buckets against his brother-in-law Davey Boy Smith at December's In Your House (the same event featuring the Arkansas Hog Pen Match on the undercard), lost to The Undertaker via disqualification at the Royal Rumble (when Diesel interfered, furious that Undertaker was getting a shot at what Diesel considered "his" title), and only retained his title at February's In Your House event when The Undertaker burst through the ring to drag Diesel "to hell", allowing Hart to win a cage match between himself and the future Outsider.
New Champs in WWE! More RIGHT HERE
Hart was a sidenote in his own championship defense, and the overall story of that February pay-per-view centered on Michaels, who put his championship opportunity (won in the 1996 Royal Rumble Match) on the line against Hart's youngest brother Owen; Owen had sent Michaels to the hospital with an enziguri on a December edition of Monday Night Raw, which exacerbated issues Michaels had been suffering related to a September 1995 concussion.
Bret Hart explained in his autobiography that his third title reign, which, in terms of company history, should have put him in a league occupied only by megastars like Hulk Hogan and above performers like Ric Flair and Randy Savage, was only a measure to transition the title to Michaels. Michaels was the focus of WWF television at the time, and Hart wasn't even the star of his own title defences, which took a backseat to the developing Undertaker-Diesel storyline.
In retrospect, it's easy to see that there was no logical outcome to this story other than a Michaels victory: he was sold as the young underdog fighting to overcome his tragic injury to defeat the ageing and increasingly-irrelevant champion (according to WWF booking, at least). Hart's impending half-year hiatus, as well, wherein he pondered retirement and/or jumping ship to WCW makes that clear as well.
In 1996, however, for the WWF's target market (which included this writer, 10 years old at the time of Wrestlemania XII), this was a true toss-up, an epic dream match between two of the company's three biggest babyfaces (the third being The Undertaker, who always seemed to exist in a realm beyond championships).