MGM Seeks "Prepackaged" Bankruptcy

Although Metro-Goldwyn-Mayer has received takeover bids from several investors, the company may have to arrange a "prepackaged" bankruptcy in order to appease its creditors.

MGM is currently owned by a group of investors including Sony (NYSE: SNE), Comcast and Providence Equity Partners. The film studio owns one of the biggest and most valuable film libraries in the world.

Bidders for MGM include Time Warner (NYSE: TWX), Liberty Media Corp., News Corp. (Nasdaq: NWS) (Nasdaq: NWSA) and Lions Gate Entertainment (NYSE: LGF).

The bids were between $1.5 billion and $2.5 billion but MGM still owes $3.7 billion to its creditors. A law firm hired by MGM is trying to work out a bankruptcy that will satisfy creditors while allowing the troubled company to proceed with being acquired.