has received rock-solid information from an absolutely reliable source that the MGM financial situation is indeed what is behind the delays of the start of “The Hobbit.”

The venerable film studio behind James Bond and about 4,000 other titles is reported to be in about $3.7 billion in debt but holds the distribution rights for two “Hobbit” films that are under contract to be made by Warners Bros. The two studios have an agreement in place to produce and distribute the film but financial difficulties for MGM, including the potential sale of the studio and its holdings, including rights to the films based on the book by J.R.R. Tolkien, has delayed the films.

The source inside the production has told that all of the wrangling with MGM is indeed a significant part of possibly pushing the films back.

“At this stage we are all working and hoping for the best case scenario. Without a doubt, the MGM situation carries great importance.”

Conflicting reports list the first of the films’ release in 2011 as well as 2012. Studio and other sources told TORn that 2012 is a foregone conclusion but some involved say there is still hope for 2011.

Peter Jackson told in July that the first script was only weeks away from completion and Ian McKellen has talked about reading it since then. (You can read a much more extensive Comic-Con report here

Meanwhile, Variety has reported that Lionsgate dropped out of the bidding for MGM, leaving two bidding entities, with a strong possibility that the approximate 140 debtholders will reject both offers.

It appears the two films will not get funded and a green light from the studios until the MGM financial affairs are settled. Meanwhile the team in New Zealand continues to work on pre-pre-production (or unofficial pre-production) and perhaps the script, although Jackson’s timeline as discussed at Comic-Con indicate that it should be well finished.