MGM files Chapter 11 bankruptcy

Metro-Goldwyn-Mayer Studios Inc, one of Hollywood’s most storied film studios, filed for bankruptcy protection on Wednesday after struggling for years to reduce its debt load.

The filing follows last week’s vote by MGM creditors to put founders of Spyglass Entertainment at the company’s helm, dealing a blow to Lions Gate Entertainment Corp’s own merger proposal.

The “pre-packaged” plan would allow MGM secured lenders including Credit Suisse Group AG and JPMorgan Chase & Co to swap more than $4 billion of debt for most of the equity in a reorganized company.

MGM controls the James Bond franchise, and has also produced or released many of Hollywood’s best-known films, including “The Wizard of Oz.”

In a statement, MGM said it expects a federal bankruptcy judge to approve the restructuring in about 30 days.

Carl Icahn, the billionaire investor and a major MGM debtholder, said he supported the studio’s bankruptcy filing.

He said that under the plan, MGM would adopt corporate governance changes, and not acquire the Cypress film library. Icahn also said he would have the right to appoint a director to MGM’s board once the company emerged from bankruptcy.

Lions Gate is separately suing Icahn, alleging that he misled its shareholders and interfered with its own efforts to merge with MGM and other studios.

MGM and roughly 160 affiliates sought protection from creditors with the U.S. bankruptcy court in Manhattan.

The company has struggled with debt since 2005 when it was sold in a $2.85 billion leveraged buyout.

That buyout group private equity firms Providence Equity Partners, TPG Capital LP, Quadrangle Group and DLJ Merchant Banking Partners, as well as Comcast Corp and Sony Corp.