MGM Bankruptcy news is still coming in, but at the moment we know that Metro-Goldwyn-Mayer Inc. said it has begun seeking its creditors’ approval on a prepackaged bankruptcy plan in which they will exchange more than $4 billion in debt for equity in a new company that has rights to the James Bond franchise and the upcoming two-part movie series “The Hobbit.” Creditors would hold 95.3 percent of the company after it exits from Chapter 11. Only approved holders of secured debt as of Oct. 4 will be allowed to vote.
Questions:
1. Why do you think that MGM chose bankruptcy over a sale?
2. What is secured debt?
3. According to the video, what were the strategic reasons that MGM has deteriorated over the years? What are some of the risks it has faced?
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Source:
Staff. (2010). MGM Bankruptcy Details: $4 Billion in MGM Studio Bankruptcy Deal, ThirdAge.com, October 8 (Retrievable online at http://www.thirdage.com/news/mgm-bankruptcy-details-4-billion-mgm-studio-bankruptcy-deal_10-8-2010).
CNN Video (2010). What Caused MGM’s decline?, Oct. 8 ( Retrievable online at http://www.cnn.com/video/)