LOS ANGELES -- Troubled movie studio Metro-Goldwyn-Mayer Inc. said Thursday that a federal bankruptcy court has approved a prepackaged bankruptcy plan in which its lenders will exchange nearly $5 billion in debt for ownership of the company responsible for half of "The Hobbit" movies. The two-part series is to go into production in February. Approval by the U.S. bankruptcy court in New York clears the way for MGM to implement its plan by the middle of the month and emerge from Chapter 11 bankruptcy protection quickly. It has been grappling with how to restructure since late last year when Stephen Cooper, a restructuring expert who helped Krispy Kreme Doughnuts and Enron, joined the company as co-CEO. MGM won approval from the court last month to arrange $500 million in financing after exiting bankruptcy protection to fund movie and TV show production. That should help pay for its half of the "Hobbit" budget, which is estimated between $530 million and $550 million. The other half is due from Time Warner Inc.'s Warner Bros. Cooper said the approval is an important milestone that "will position MGM to be a successful studio going forward." Cooper will step down when lenders take over, and be replaced by Spyglass Entertainment's Gary Barber and Roger Birnbaum, who will serve as co-chairmen and co-CEOs. The company has largely determined its board of directors, according to bankruptcy filings. Barber and Birnbaum are to take seats along with three members from lenders Highland Capital Management LP, Solus Alternative Asset Management LP and Anchorage Capital Group LLC; former MySpace co-president Jason Hirschhorn; and former CBS Corp. Chief Financial Officer Fred Reynolds. Two board seats have not yet been determined, including one who would represent major debtholder Carl Icahn.