The famous Hollywood film studio MGM filed for court protection from creditors on Wednesday in order to continue operations and participate in the production of two films based on Tolkien’s novel The Hobbit.
Legendary films such as Ben-Hur, The Wizard of Oz, and those about James Bond have been filmed at MGM studios. After being acquired in 2005 by a consortium of investment funds, MGM began to accumulate debt. The bankruptcy with restructuring will allow creditors led by Credit Suisse and JP Morgan Chase to exchange loans worth approximately four billion dollars for equity stakes in the company. As part of this plan, control of the film studio will be taken over by the leaders of Spyglass Entertainment, a smaller Hollywood studio that has recently produced a number of successful films, such as It’s Rock ‘n’ Roll, Star Trek, and Invictus. MGM’s request to the court for creditor protection marked the end of months of wrangling, marked by demands from Carl Icahn, the owner of a significant number of MGM’s corporate bonds, for MGM to acquire rival Lionsgate in which he has an ownership stake. The resolution allowed MGM to agree to changes in the management structure, which granted Icahn a seat on the board of directors. The company intends to emerge from bankruptcy within 30 days. (H)
