February 3rd, 2010 by Reed Allmand 
Metro-Goldwyn-Mayer (MGM) may be considering a prepackaged Chapter 11 bankruptcy in addition to a sale of the company. The attempts to sale the company and the consideration of Chapter 11 bankruptcy come after the company ran into difficulty paying $3.7 billion in debt.
Many media companies, including Time Warner Inc and Lions Gate Entertainment Corp, have put in bids for MGM, along with separate offers from private equity firms, the sources said. But not all the 12 companies that signed confidentiality agreements to look at MGM’s books over the past month have put in bids, they added.
The bids are all non-binding and came in under $2 billion which is far less than enough to repay the company’s debts. MGM’s lenders have extended debt forbearance until Jan. 31, which exempts the company from making interest payments of an undisclosed amount as it tries to develop a long-term plan to sell the company and/or restructure in Chapter 11 bankruptcy.
Under a prepackaged Chapter 11 bankruptcy, MGM would need to gain the agreement of most of its major creditors to significantly cut their debt obligations. This would clear the way for potential buyers to confidently invest in the company without fear that outstanding creditors would aggressively pursue it for debt payments or that such payments would eat away at their profits. If MGM is able to successfully arrange a prepackaged Chapter 11 bankruptcy, they could possibly move through bankruptcy in 30 to 90 days and sell the company with ease. On the other hand, if the company is unable to sell the company, creditors may decide to keep the company and restructure it, by still filing a prepackaged Chapter 11 bankruptcy plan.
About Reed Allmand
Allmand's vision is rooted in his own financially precarious childhood in Abilene "My father always had difficulty holding a job and supporting our family, so after my parents divorced when I was 12, my sister and I got jobs to help make ends meet," he recalls. "I remember what it felt like as a child to worry that our car would be repossessed or home foreclosed on."
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