The Hollywood Reporter, is, you guessed it, reporting that the debtholders of MGMs $3.7 billion shortfall may vote to give the studio’s restructuring team a fifth chance to cover its debt.

The folks who gave the loan weren’t satisfied with the sales bids which included the reportedly highest offer from Time Warner at $1.7 billion. According to the story (which contains a super annoying AT&T banner add): “The proposal is expected to pass, giving MGM at least another several weeks to work on its restructuring.”

What does this mean for the two potential Hobbit movies?

It probably means more waiting until the movies go into active pre-production and gets a greenlight. MGM and Warners share the rights to the film with MGM holding distribution rights and approximately half the potential profits. If MGM is sold, those rights would be sold as well, leaving Warners with a new partner. Going bankrupt might cause other entities to try to lay claim to some of the profits or leave the rights in limbo.

We do know some money has been flowing to the pre-pre-production and conceptual designs and scripting has been done on the films so the folks in New Zealand are not sitting around idle. Instead they are quietly going about their business, preparing for the eventual production to launch. It sounds like the current CEO could be out, giving the in-limbo studio new leadership since the current administration brought in for restructuring has been seemingly ineffective.

Announcements about contracts with actors, release dates and the shooting schedule will all come after the film has a budget and is approved by the studio. Jackson and others remain publicly optimistic.

Thanks to macfalk for bringing the story to our attention in the forums. Anybody with knowledge about the situation is welcome to write or