Metro Goldwyn MayerMetro-Goldwyn-Mayer Studios has filed for a re-organization bankruptcy, the studio announced Wednesday. The move had been expected following the company's announcement late last week that its creditors had approved a pre-packaged bankruptcy for MGM and 160 of its affiliates. The reorganization plan includes a merger with Spyglass Entertainment.

The famous movie studio, which produced classics like The Wizard of Oz and still holds valuable assets including the James Bond franchise, had been struggling for years under a mountain of debt that reached as high as $4 billion. For most of the year, the company had been a takeover target for both Lionsgate Entertainment and investor Carl Icahn.

Under the Chapter 11 bankruptcy filing, MGM plans to exchange more than $4 billion in debt for equity in MGM once it emerges from bankruptcy, the studio said. It then expects to raise roughly $500 million in financing to cover the costs of its operations and the production of new movies and TV series. Throughout the process, MGM will retail ownership of all its assets.

The court is expected to approve the bankruptcy plan in the next 30 days and the studio says it has enough cash on hand to fund its operations through the bankruptcy process.

"For many months, we have been working with our lenders to explore the strategic options available to MGM to improve MGM's financial position and maximize the company's value," Steve Cooper, MGM's co-CEO, said in a statement. "By sharply reducing MGM's debt load and providing access to new capital, the proposed plan of reorganization achieves these goals. Having received approval through our recently completed solicitation process, we are pleased that the lenders support MGM's approach."

The studio's creditors, including Credit Suisse Group (CS) and JPMorgan Chase (JPM), will swap billions of dollars in secured debt for equity in the refashioned MGM. Icahn, who had recently been snapping up MGM debt as part of his takeover plans, will have the ability to appoint a director to the MGM board once it emerges from bankruptcy, notes a Reuters report.

For MGM, the Chapter 11 filing is aimed at removing the load of debt it has struggled under since its $2.85 billion leveraged buyout in 2005 by a group of private equity investors teamed with Comcast (CMCSA) and Sony (SNE), according to Reuters. In the years following the buyout, MGM and other studios have had to contend with DVD sales falling sharply as on-demand movies have become more popular and peer-to-peer technology has enabled people to pirate movies more easily.

MGM will be overseen by Spyglass executives Gary Barber and Roger Birnbaum after the bankruptcy.

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Courtney

They will RETAIL ownership of all of their assets? So does they mean they will sell their assets? Any chance of hiring a proofreader before publishing a story around here?

November 05 2010 at 11:49 AM Report abuse rate up rate down Reply
Lee Stevens

I lived in California when Ted turner rode into town and sold I will make sure that MGM starts making all the great type of movies the studio was known for."Why we will be making the next "Gone With the Wind" ,new musicals and Westerns and all you people who have been working here for decades your jobs are safe.Everybody bought the bull hook line and sinker.The ink wasn't dry on the contract when Turner had the entire MGM Vault in armored cars out the door and the studio up back up for sale when he found out LA and Culver City wasnt going to let the zoning change to put condos up at MGM or Fox.They sold off the back lot a huge mistake for short term profits It was the slickest carpet bagging move since the Civil War.I am not quite sure how it shook out.Micheal Landen was producing out of there,he was kind and generous, Lorimar was in.The investment in Casinoes paid off pretty well up to the crash.The studio got a historical charm but it needs a major overhaul.Without the film library and just the 007 franchise which is pretty well played out the fat lady is warming up.I''d like to see a company like Intel hire a Norman Lear and fund at least a 5 year full production schedule and modernization.If someone like Lear who knows Hollywood could place the right teams in there.Intel knows all the right technical moves. Presto theres no reason MGM can not roar again.There were a lot of really good cost effective aspects to the old studio system.With the grind of corporate exchanges in the rest of the studios they lost the good aspects.LA, Culver City, The Entertainment Unions all of Hollywood, and the whole State of California needs to get lit up and lead this country out of these doldrums.There are thousands of people that want to work hard and turn out great new stuff.There's just no excuse for not having a great movie out every month,several hit albums,a fashion line and a whole channel of must see internet.You could turn Venice Blvd into the New French Quarter with the studios at the hub.The pieces are all there.

November 05 2010 at 4:32 AM Report abuse rate up rate down Reply
rpmjicha

I guess we won't hearing Leo the Lion roar too much anymore. Who knows what will happen with the "James Bond" franchise. The next Bond was put on hold alomst a year now. Even if Sylvester Stallone thinks a 7th Rocky movie will save MGM, it won't. Most of the TV shows from MGM are not on DVD, except for the first season of CHiP's. Poltergeist and the Hannibal sagas will be done for good. It did carry the Tom & Jerry and Droopy cartoons.

November 05 2010 at 2:53 AM Report abuse rate up rate down Reply
Darren Berry

mGM declares chapter 11 bankruptcy. are they owned by the uaw in any way? i mean the last two letters is GM? hahahahahahahahahahah!!!!!!

November 04 2010 at 9:42 PM Report abuse -5 rate up rate down Reply
Marilyn

Don't understand why they didn't do what Debbie Reynolds told them to do, Open it up to the Public to see like Univerals Studios...have tours etc. It's a shame they didn't.

November 04 2010 at 8:16 PM Report abuse +4 rate up rate down Reply
alfredschrader

The way to fix MGM is simple, it has to change with the times. This is 2,010 I invented a new dedicated system whereby all of the features, filmed entertainment, etc. are stored in one large mainframe computer. Customers gain instant access via their home PCs. No waiting. No gas. No commercials. They pay a monthly fee for this. They could contact me if they like considering I'm the only one who knows how to do it....Alfred-

November 04 2010 at 5:39 PM Report abuse -1 rate up rate down Reply
acheermom1

Oh for the days of Louis B. Mayer!!!! That is when MGM was at its very best!!!

November 04 2010 at 5:30 PM Report abuse +3 rate up rate down Reply
drooster47

You're a racist pig.

November 04 2010 at 4:09 PM Report abuse -3 rate up rate down Reply
1 reply to drooster47's comment
Jon!

No, drooster47, I think you're the racist pig.

November 04 2010 at 6:29 PM Report abuse +1 rate up rate down Reply
juliademaria

I have a small pension plan with MGM and I'm wondering if that's going to be affected. I called both MGM and the holder of the plan, but they say they don't know anything yet. I guess it's wait and see.

November 04 2010 at 3:02 PM Report abuse +3 rate up rate down Reply
Khelama

Maybe if they would open up, shed the elitism, nepotism, inner-circle prejudice, racism, bigotry and sexism, and allow fresh perspectives from other than young white or old recycled males, they might actually turn this around. America will soon have a population dominated by people of color and already has a dominant female population, but do you see that in Hollywood films? No. People are losing interest in seeing the same story told a thousand times, the same recycled stars over and over again, and the same bigoted cultural point of view. If Hollywood doesn't wake up, they are going to be completely replaced by the internet and foreign filmmakers who don't harbor the same prejudices and are more diverse.

November 04 2010 at 2:35 PM Report abuse -7 rate up rate down Reply
1 reply to Khelama's comment
drooster47

You're a racist pig.

November 04 2010 at 4:10 PM Report abuse +4 rate up rate down Reply