MGM Bankruptcy Plan Approved

By Richard Gibson
Oct 29 2010

Struggling movie studio MGM has won approval for their bankruptcy plan that will not include a possible merger with Lions Gate Entertainment.

Under the terms of the agreement, Spyglass Entertainment will take the helm of MGM.

This plan has been approved by majority shareholder Carl Icahn. However, he has been the major push for Lions Gate to merge with MGM. Icahn still has the chance to fully challenge the plan in bankruptcy court.

For the past several years MGM has struggled to get their debt under control. They slipped into bankruptcy and has looked for plan that would allow them to emerge and save the historic movie studio that has been home to famed James Bond series of films.

Icahn has been offered the chance to name a member of the board which could allow the billionaire investor a chance to continue with the merger with Lions Gate. At the moment, Spyglass Entertainment chiefs Gary Barber and Roger Birnbaum will head MGM as they emerge from bankruptcy.

MGM currently has $2.85 billion in debt and had managed to develop a plan to sell the studio to a private investment firm. Lions Gate sued Icahn for interfering with the sellout. The studio claimed that Icahn was interfering for personal gain in blocking the sale.

If the plan is approved MGM would emerge from bankruptcy with less than $10 million in debt. This would allow the company to start producing films once again, something it has not done since falling into bankruptcy.