MGM Studios is seeking approval from its lenders for a pre-approved bankruptcy plan that would see 95% of its assets turned over to Spyglass Entertainment. The studio's existing managers would step down as part of the deal, which is expected to be finalised within the next two weeks. If its is successful, the jobs of lower-level employees will be protected, as well existing contracts with licensees.
MGM has been struggling or the past five years and this marks the final stage in its collapse. Although a spokesperson claimed that "we expect to continue normal business operations throughout the restructuring process," projects including The Hobbit and the next James Bond film are likely to be delayed until a solution is reached. The studio's $4bn of debt has been blamed on falling DVD sales, but the most notable problem is that MGM hasn't had a hit film for a long time now. The recession has led to a fall in value of some of its assets, compounding the problem. Managers are hoping that the bankruptcy deal will rescue the studio's current projects even at the expense of the studio itself.
