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Creditors May Force MGM Into Chapter 11 Bankruptcy

Posted By admin || 30-Sep-2009

According to an article in the NYPost, feuding creditors are threatening to force movie studio Metro-Goldwyn-Myer (MGM) into bankruptcy if their demands are not met.

The article said:

"Both sides staked out their positions during two conference calls Wednesday afternoon that lasted a combined six hours, according to a half-dozen sources on the call.

They described the calls, led by Zolfo Cooper restructuring specialist Stephen Cooper, as openly antagonistic, with some debtholders like Leon Black's Apollo Management and Stark Capital Partners threatening to push MGM into involuntary bankruptcy if their terms weren't met."

But as long as MGM continues to pay their credit obligations creditors will have very little leverage to force the studio in Chapter 11 bankruptcy.  However, as negotiations move forward, creditors have worked hard to get a list of debtholders as the struggling studio attempts to gain additional funding for productions. As it stands with more than 80 firms holding MGM's $3.7 billion in debt,  no one creditor has the power to force MGM into Chapter 11 bankruptcy, but if they could find out who the other creditors are they can form a posse of creditors powerful enough to force the studio into bankruptcy. As you may have guessed, MGM is protecting that list of debtholders.

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