Potential Bankruptcy Hits the Big Screen: Sinking MGM Gets More Time to Settle Tremendous Debt

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Potential Bankruptcy Hits the Big Screen: Sinking MGM Gets More Time to Settle Tremendous Debt

Posted On : Apr-09-2010 | seen (380) times | Article Word Count : 363 |

On Mach 31st, the once major film studio, MGM, now struggling, with its head barley above water, won a bonus six weeks to pay their off their enormous debt;

On Mach 31st, the once major film studio, MGM, now struggling, with its head barley above water, won a bonus six weeks to pay their off their enormous debt; and consider options including, according to the New York Times, plans to give control to some of its lenders, some major bids (Time Warner and Len Blavatnik), potential takeovers as well as quite possibly, filing for bankruptcy.

Though MGM used to take in roughly $500 million a year from both its film and television libraries, as of last year, MGM is nearly $3.7 billion in debt. Interest payments, alone, total $250 million a year. And with the country’s recent recession, MGM’s income has been hit hard—they are no longer distributing as many new films as they have in the past and are presently banking on “Hut Tub Time Machine” (which earned $14,020,502 it’s opening weekend) and the 23rd installment of the James Bond series, to bring in revenue. But with more people today, choosing to avoid $12 a movie ticket, and instead, rent DVDs and stay at home, box office revenues alone will not be able to save MGM (unless they release a sequel to Avatar!).

Last year, MGM’s CEO, Stephen Cooper, tried to convince lenders to restructure the company's long-term debt so the studio could continue to exist with its present business model. The lenders, however, refused and instead, urged the CEO a sale was the only way to fully regain their investment. Eventually, Cooper placed MGM on the auction block, to better evaluate interest from potential buyers and the overall value of assets for sale.

Back in 2004, when Sony, Comcast and three private equity firms bought MGM for $4.8 billion, in a leveraged buyout, it left the studio with large debts—now due May 14th, 2010. Skadden, Arps, Slate, Meagher & Floam and the Los Angeles-based, bankruptcy team, Klee, Tuchin, Bogdanoff & Stern, are advising MGM and have assisted in obtaining the extension.

Earlier last year, MGM’s auditor proposed the studio was en route to meeting its debt responsibilities. Now, they face the potential of a Chapter 11 bankruptcy filing, if unable to meet its extended debt deadlines.

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<h1>Potential Bankruptcy Hits the Big Screen: Sinking MGM Gets More Time to Settle Tremendous Debt</h1> Author: <a href='http://www.articleseen.com/profile_Timothy McFarlin.aspx'>Timothy McFarlin</a> On Mach 31st, the once major film studio, MGM, now struggling, with its head barley above water, won a bonus six weeks to pay their off their enormous debt; and consider options including, according to the New York Times, plans to give control to some of its lenders, some major bids (Time Warner and Len Blavatnik), potential takeovers as well as quite possibly, filing for bankruptcy.

Though MGM used to take in roughly $500 million a year from both its film and television libraries, as of last year, MGM is nearly $3.7 billion in debt. Interest payments, alone, total $250 million a year. And with the country’s recent recession, MGM’s income has been hit hard—they are no longer distributing as many new films as they have in the past and are presently banking on “Hut Tub Time Machine” (which earned $14,020,502 it’s opening weekend) and the 23rd installment of the James Bond series, to bring in revenue. But with more people today, choosing to avoid $12 a movie ticket, and instead, rent DVDs and stay at home, box office revenues alone will not be able to save MGM (unless they release a sequel to Avatar!).

Last year, MGM’s CEO, Stephen Cooper, tried to convince lenders to restructure the company's long-term debt so the studio could continue to exist with its present business model. The lenders, however, refused and instead, urged the CEO a sale was the only way to fully regain their investment. Eventually, Cooper placed MGM on the auction block, to better evaluate interest from potential buyers and the overall value of assets for sale.

Back in 2004, when Sony, Comcast and three private equity firms bought MGM for $4.8 billion, in a leveraged buyout, it left the studio with large debts—now due May 14th, 2010. Skadden, Arps, Slate, Meagher & Floam and the Los Angeles-based, bankruptcy team, Klee, Tuchin, Bogdanoff & Stern, are advising MGM and have assisted in obtaining the extension.

Earlier last year, MGM’s auditor proposed the studio was en route to meeting its debt responsibilities. Now, they face the potential of a Chapter 11 bankruptcy filing, if unable to meet its extended debt deadlines.About the Author: The <a rel="nofollow" href="http://www.mcfarlinlaw.com/tmcfarlinBio.php">author</a> is an authority in <a rel="nofollow" href="http://www.mcfarlinlaw.com/bankruptcy_basics.php">bankruptcy</a> and <a rel="nofollow" href="http://www.mcfarlinlaw.com/loanmodifications_answers.php">loan modifications</a>. Article Source: <a href='http://www.articleseen.com/Article_Potential-Bankruptcy-Hits-the-Big-Screen-Sinking-MGM-Gets-More-Time-to-Settle-Tremendous-Debt_15874.aspx'> http://www.articleseen.com/Article_Potential Bankruptcy Hits the Big Screen: Sinking MGM Gets More Time to Settle Tremendous Debt_15874.aspx</a>

Article Source : http://www.articleseen.com/Article_Potential Bankruptcy Hits the Big Screen: Sinking MGM Gets More Time to Settle Tremendous Debt_15874.aspx

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The author is an authority in bankruptcy and loan modifications.

Keywords : California bankruptcy attorney, deed in lieu of foreclosure, mcfarlin & geurts Bankruptcy Attorneys Southern California,

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