Millions of movie-goers are brokenhearted to learn that some highly anticipated films, including a Red Dawn remake, the next Bond movie and The Hobbit are on hold for now. What could possibly bring production on these much-awaited movies to a screeching halt? It probably has something to do with MGM Studio's financial troubles.
IN PICTURES: 9 Ways To Go Bankrupt
Of course, MGM is not alone. In the past few years, corporate giants have been toppling across the nation. During a four-week period in May and June of 2009, eight public companies worth more than $1 billion filed for bankruptcy. In the first six months of 2010, fifty publicly-traded companies filed for Chapter 11 or Chapter 7 bankruptcy. This is undeniable proof that even the big boys are not immune to the worst recession in a generation.
In recent months, Metro Goldwin Mayer (MGM) has been facing serious financial turmoil, bringing production on movies like the Farrelly Brothers' The Three Stooges and Robert Ludlum's The Matarese Circle to a standstill. Known for the roaring lion at the beginning of their movies and unforgettable classics like The Wizard of Oz and 2001: A Space Odyssey, MGM was once hailed as a Hollywood movie-making powerhouse.
Although MGM has not officially thrown in the towel, the studio is deep in debt after a decades-long financial decline. Since its creation in 1924, MGM has changed hands several times. In 2005, the 86-year old studio was sold to Sony, Comcast and a few private equity firms. Some critics say that's when the worst troubles began for MGM. The studio has been trying to sell itself since November, but they have yet to receive an acceptable offer.
MGM is currently strapped with nearly $4 billion in debt. In July, the studio requested a sixth extension from its 100+ lenders, asking for time to restructure and possibly hire a new CEO. The lenders approved the extension, giving MGM until September 15 to pay off their debts.
On September 15, 2008, Lehman Brothers filed for Chapter 11 bankruptcy protection after the well-known securities firm could not find a buyer. Experts say the Lehman bankruptcy represents the biggest failure of an investment bank since the downfall of Drexel Burnham Lambert in 1990. Lehman Brothers held more than $690 billion in assets before its collapse. (Learn more about the famous fall in Case Study: The Collapse of Lehman Brothers.)
In what has been branded the largest industrial failure in U.S. history, GM declared bankruptcy on June 1, 2009. The industrial titan was worth more than $91 billion before it went bankrupt. In the 2009 filing, GM reported $82 billion in assets and $173 billion in debt.
The global auto maker's violent collapse sent shockwaves around the world, prompting layoffs in the U.S., Canada, Belgium, Germany, Spain, Britain and a few other European countries. GM's restructuring plan in the U.S. will result in the elimination of 31,000 hourly and salaried U.S. employees by 2012, a move that will cut the corporation's payroll expenses by 30%. (What can shareholders expect from this bankrupt company? Don't miss What's In Store For GM Stockholders?)
American energy company Enron Corporation filed for bankruptcy on December 2, 2001. At the time of the filing, the Houston-based company claimed $65.5 billion in assets. As one the world's leading companies in electricity, natural gas, paper and communications, Enron employed approximately 22,000 workers and claimed revenues of nearly $101 billion in 2000. Before its demise, Fortune awarded Enron with the prominent title of "America's Most Innovative Company" for six years in a row.
However, the Enron fraud scandal came to light in late 2001, leading to the company's financial downfall. When Enron filed for bankruptcy, the company had an estimated $23 billion in liabilities, including debt and guaranteed loans. (Protect yourself by learning how investors have been betrayed in the past. Don't miss The Biggest Stock Scams Of All Time.)
When Atlanta-based Delta Air Lines filed for bankruptcy on September 14, 2005, the company held $21.8 billion in assets. The world's largest airline in passenger traffic and fleet size, Delta operated a massive domestic and international flight network.
However, Delta had been on a financial nosedive for many months leading up to the filing, struggling with massive losses, thanks in part to skyrocketing jet fuel prices. Before filing for Chapter 11 bankruptcy protection, the airline had already laid off thousands of workers and hacked away at employee pay and benefits. The airline was $20.5 billion in debt at the time of the filing. (Why is the airline industry synonymous with ongoing losses and insolvency? We take a look in 4 Reasons Why Airlines Are Always Struggling.)
In April 2007, after fending off an aggressive $10 billion bid by US Airways, Delta emerged from bankruptcy as a much smaller, yet still independent carrier. Now the number three carrier in the U.S., Delta is a lean, mean airline machine. The airline has cut one in every six jets and approximately 20% of the 60,000 employees since filing for bankruptcy.
Of course, this is just a small sampling of the countless corporate bankruptcies the U.S. has seen in the last decade. Some other corporate giants who have taken a fall include Washington Mutual, WorldCom, CIT Group, Conseco, Chrysler, Extended Stay and Six Flags. It just goes to show that in today's tough economy even the most powerful corporate empires are not invincible.
Catch up on your financial news; read Water Cooler Finance: I-Spy, IPOs And iPhones.