MGM Pre-Packaged Bankruptcy Approved

Troubled studio Metro-Goldwyn-Mayer Inc. says that a federal bankruptcy court has approved its prepackaged bankruptcy plan.

In the plan, its lenders will exchange nearly $5 billion in debt for ownership of the company that owns half of "The Hobbit" movies. The two movies are to go into production in February.

Co-CEO Stephen Cooper said Thursday that the approval was an important milestone for the company. It has been grappling with how to restructure itself since late last year.

Last month, the company won approval from the court to arrange $500 million in financing after exiting Chapter 11 bankruptcy to fund movie and TV show production.

MGM is on the hook for half of the "Hobbit" budget between $530 million and $550 million. The other half is due from Warner Bros.

©2010 The Associated Press. All rights reserved.


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