After MGM finally decided to give The Hobbit the green light we knew they were taking steps in the right direction. The James Bond franchise is still in limbo but we’re hoping at some point they’ll get around to bringing it out of semi-retirement. Unfortunately, that plan will have to wait until the studio gets through their latest legal battle. It’s no secret that over the past couple years MGM has been battling some major debt, $4 billion to be exact, and according to a press release sent out by the studio they have officially filed for Chapter 11 bankruptcy.
The Chapter 11 filing is the first step in the reorganizing plan for MGM.
MGM has sufficient cash on hand, and the consent of its lenders to use this cash, to fund normal business operations throughout the Chapter 11 process. MGM has filed “first-day” motions seeking immediate Court approval to continue paying its employees, vendors, participants, guilds and licensors in the ordinary course of business during the entire Chapter 11 process, for both pre-petition and post-petition obligations. MGM anticipates that the Plan will be confirmed by the Court in approximately 30 days.
“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,” said Co-Chief Executive Officer Steve Cooper. “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. We now look forward to quickly emerging from Chapter 11.”
Upon its exit from bankruptcy, MGM expects to raise approximately $500 million in financing to fund operations, including production of a new slate of films and television series. MGM will retain ownership of all of its assets.
We all knew that it would happen sooner or later. At least now they can get on the path to recovery and once again become a serious competitor in the studio market. The best news to come from this is their ability to retain ownership of their assets, which means their library and all their physical properties will stay in tact.
It’s also great that so many of the studio’s lenders are on board with this. We know there are plenty of companies who would have given up on them but they must have some faith that they’ll get a return on their investment. Hopefully this all works out and eventually everything will get back on track (James Bond we’re looking at you).
Are you surprised that MGM filed for Chapter 11?
Source: Coming Soon