Metro-Goldwyn-Mayer Inc.’s creditors have approved a bankruptcy plan that will allow it to merge with Spyglass Entertainment, the Hollywood film studio said in a statement Friday.
More than half of MGM’s creditors, holding more than two-thirds of the studio’s $4 billion US debt, had to support the plan, which must be filed in U.S. Bankruptcy Court as a Chapter 11 reorganization.
The plan that the lenders have approved includes having Spyglass co-founders Gary Barber and Roger Birnbaum take over as MGM’s co-CEOs, the Wall Street Journal reported Saturday.
The U.S. Bankruptcy Court’s review of the MGM-Spyglass reorganization plan is expected to take 30 to 60 days.
Assuming Barber and Birnbaum win court approval for their operating mandate, the studio’s first two priorities will be to firm up a 50 per cent interest in the upcoming production of a two-part movie based on J.R.R. Tolkien’s The Hobbit and to restart development of the next James Bond movie.
The creditors’ approval came with the backing of MGM’s largest shareholder, billionaire investor Carl Icahn, in exchange for representation on MGM’s board, even though he had previously publicly supported a rival bid from Vancouver-based Lions Gate Entertainment Corp.
On Thursday, Lions Gate filed a lawsuit against Icahn, alleging that he blocked its MGM bid by purchasing more MGM debt.
Lions Gate had pressed its case strongly in the past week, detailing its proposal in a securities filing and touting its management’s expertise.
MGM has struggled for years to reduce or eliminate its debt.