Metro-Goldwyn-Mayer Studios Inc filed for bankruptcy on Wednesday, marking a climax to a drawn-out restructuring for the storied Hollywood studio that controls the James Bond films and made "The Wizard of Oz."
The Chapter 11 filing follows last week's vote by creditors to support a prepackaged bankruptcy in which MGM will shed more than $4 billion of debt and hand control to its secured lenders.
Management would be assumed by Gary Barber and Roger Birnbaum, who run the Spyglass Entertainment film company.
MGM filed for protection from creditors after striking an agreement with Carl Icahn, one of its largest debtholders, to win the billionaire's support for a restructuring.
Icahn previously supported a bid to merge MGM with another studio, Lions Gate Entertainment Corp. MGM also said its secured lenders overwhelmingly support the reorganization.
MGM was founded in 1924 and is known for its roaring lion logo. It has produced, released, or controls many of Hollywood's best-known films, including "Ben-Hur" and the Pink Panther and Rocky film series.
Spyglass' involvement with MGM has also been seen as key to a lucrative arrangement with Time Warner Inc's Warner Bros Pictures and the director Peter Jackson to make two movies based on J.R.R. Tolkien's novel "The Hobbit."
The MGM reorganization calls for secured lenders including Credit Suisse Group AG and JPMorgan Chase & Co to swap more than $4 billion of debt for equity, giving them ownership of most of a reorganized company.
MGM has struggled with too much debt since 2005 when it was sold in a $2.85 billion leveraged buyout.
The buyout group included private equity firms Providence Equity Partners, TPG Capital LP, Quadrangle Group and DLJ Merchant Banking Partners, as well as Comcast Corp and Sony Corp.
MGM said it expects a federal bankruptcy judge to approve the restructuring in about 30 days.
The Los Angeles-based company and roughly 160 affiliates sought protection from creditors with the U.S. bankruptcy court in Manhattan. Judge Stuart Bernstein was assigned to the case.
MGM had $2.67 billion of assets and $5.77 billion of liabilities before accounting adjustments as of September 30, a court filing shows.
The company sought court approval to spend up to $125 million on operations in the next 15 weeks. This may include sums for "The Hobbit," a prequel to "The Lord of the Rings" trilogy, which grossed $3 billion globally, court papers show.
Stephen Cooper, MGM's co-chief executive, in a statement said the reorganization will improve MGM's finances by "sharply reducing" debt and providing access to new capital.
MGM said it expects to raise $500 million upon emerging from bankruptcy to fund operations, including the production of films and TV series.
Icahn said the plan calls for MGM to adopt a series of corporate governance changes, and give him the right to appoint a board director once the company emerges from bankruptcy.
MGM also agreed not to buy the libraries of two Spyglass affiliates, Cypress Entertainment Group Inc and Garoge Inc.
"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," Icahn said in a statement.
Barber and Birnbaum would also sit on the board of a reorganized MGM, along with seven directors named by lenders, including several independent directors, MGM said.
Spyglass films have included "The Sixth Sense" in 1999 and "Dinner for Schmucks" earlier this year.
Lions Gate had proposed a merger with MGM that would have given creditors a 55 percent stake in the combined company.
Icahn is also conducting a hostile takeover bid for Lions Gate. That company is separately suing Icahn, alleging he interfered with its efforts to merge with MGM.
A Lions Gate spokesman declined to comment. Lions Gate has produced the hit TV show "Mad Men" and the Oscar-winning film "Precious." It has offices in Vancouver, British Columbia.