Court date comes less than a month after studio filed for Chapter 11
MGM’s long-murky future will come into focus next week, when a federal bankruptcy court’s set to confirm its bankruptcy plan.The Dec. 2 hearing in Manhattan before Judge Stuart Bernstein will take place less than a month after MGM’s filing for Chapter 11 bankruptcy protection with a pre-packaged plan that it said could move through the court in as few as 30 days. The deadline for court filings of any objections to the plan is on Friday, the day after Thanksgiving. And a required meeting of creditors — where they can question MGM reps — has been set to take place in Manhattan on Tuesday, two days before the court hearing. “Attendance by the creditors at the meeting is welcomed by not required,” MGM said in a court filing. “At the meeting, the credtiors may examine the debtors and transact such other business as may properly come before the meeting.” In a Nov. 12 hearing, Bernstein authorized amendments to MGM’s plan including the exclusion of the Spyglass Entertainment library from the deal, thus reducing the stake that Spyglass will have in the revamped MGM from 5% to less than 1%. Spyglass toppers Gary Barber and Roger Birnbaum will become the new heads of MGM once it emerges from Chapter 11 protection. Bernstein also granted permission at the Nov. 12 hearing to the studio to seek a $500 million loan to ramp up operations. The Chapter 11 plan will eliminate $5 billion in debt by converting a loan through JPMorgan into the new stock in the reorganized company. The plan wipes out the equity from the $5 billion acquisition of the studio in 2005 by a consortium led by Sony Corp. Lionsgate and Carl Icahn may play major roles in MGM’s future. Lionsgate vice chair Michael Burns admitted two weeks that Lionsgate execs were in New York City to meet with MGM execs and discuss a possible MGM-Lionsgate merger. As for Icahn, he owns about 18% of the MGM debt and will receive authority to appoint one of the nine directors on the new board. And despite his ongoing battle for control of Lionsgate, the billionaire takeover artist has expressed support for combining MGM and Lionsgate. MGM’s assets include the James Bond franchise and a half interest in “The Hobbit” films, its name and logo, the United Artists operations, a library with more than 4,000 titles and a bare-bones film and TV operation. “The Hobbit” is expected to start shooting in New Zealand in February. On Tuesday, MGM disclosed in a court filing the composition of its new board, including three members who were part of the creditors committee — Patrick H. Daugherty of Highland Capital Management, Christopher Pucillo of Solus Alternative Asset Management and Kevin Ulrich of Anchorage Capital Group. MGM also tapped Jason O. Hirschhorn, co-president of MySpace, and former CBS chief financial officer Frederic G. Reynolds as directors along with Barber and Birnbaum.
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