Metro-Goldwyn-Mayer has filed for Chapter 11 bankruptcy with the support of investor Carl Icahn for a prepackaged reorganization plan, appointing Spyglass Entertainment's Gary Barber and Roger Birnbaum as co-chief executive officers.
Last week, MGM lenders agreed to trade more than $4 billion in debt holding for a collective 95 percent stake in the studio once it emerges from Chapter 11.
"MGM is emerging from one of the most challenging periods of its storied history," says Barber and Birnbaum in a joint statement. "We are honored and inspired at the prospect of leading one of Hollywood's most iconic studios into its next generation of unforgettable filmmaking, global television production and distribution, and aggressively pursuing, developing and exploiting new digital entertainment platforms."
The decision results in the rejection of Icahn's proposal last month to merge Lionsgate, another studio he owns a stake in, with MGM. Meanwhile, Lionsgate is suing Icahn for allegedly misleading its shareholders and interfering with its own efforts to merge with MGM and other studios. The new MGM plan, which is subject to approval by the court in 30 days, sees the studio adopting corporate governance changes, not acquiring the Cypress film library (a Spyglass affiliate studio) and gives Icahn the right to appoint a director to MGM's board.
"I am pleased that we were able to obtain an agreement to make changes to the MGM prepackaged plan that allows me to support it and enables the company to avoid a potentially costly and disruptive bankruptcy process," says Icahn.
Past offers to bail out MGM also included proposals from Sahara India Pariwar ($2 billion) and Time Warner ($1.5 billion), both of which were rejected.