Forbes magazine have reported that MGM creditors have decided to move the company into chapter 11 bankruptcy, rather than let investor Karl Icahan move on in.
This means that MGM, who owns the rights to The Hobbit and the James Bond franchise
“will have about a month to get its house in order and all of the $4 billion in debt will be turned into equity.
The company will then come under the management of Spyglass Entertainment heads Gary Barber and Roger Birnbaum.
Spyglass already has a long history in Hollywood. The company helped finance successful films like Star Trek, Wanted and Four Christmases.” Read more here
Berber and Birnbaum will become Chairmen and Chief Executives of MGM.
Earlier this month, if successful, the plan was set to
[freeze] out bidders like Lionsgate, Time Warner and India’s Reliance Entertainment. Offers for the studio were rumored to be in the $1.5 billion to $2 billion range. Buyers would have been getting a rich library of films that throws off an estimated $350 million per year, the rights to potentially lucrative franchises like James Bond and The Hobbit … and $4 billion in debt. Read more here
The UK’s Guardian newspaper said that the two new bosses intend to be ruthless with costs
Under the new management, MGM is expected to make just four to six movies a year, most with modest budgets of $50m. Gary Barber and Roger Birnbaum… have said they aim to be ruthless about costs, outsource distributing films to theatres and focus on the TV business and online services . More here
It’s not clear yet how the decision will impact on the filming, or the financing, of the two Hobbit movies.
What is Chapter 11 Bankruptcy?
A case filed under chapter 11 of the United States Bankruptcy Code is frequently referred to as a “reorganization” bankruptcy.
It provides (generally) for reorganization, usually involving a corporation or partnership. (A chapter 11 debtor usually proposes a plan of reorganization to keep its business alive and pay creditors over time. People in business or individuals can also seek relief in chapter 11.) source