The fate of a Peter Jackson-directed adaptation of 'The Hobbit' has been on shaky ground for a while now. After the 'Lord of the Rings' director said he would be happy to make the film, casting rumors began to swirl (as they do with any high profile production) and it was generally assumed that everything was on the up and up. Until a few weeks ago, of course, as it seemed 'The Hobbit' was struck with problem after problem (a fire even destroyed their miniatures workshop) culminating with Jackson saying that he had no contract to actually direct the film (or films).

According to the NY Times, all of the papers have finally come together. New Line Cinema and MGM have agreed upon precisely how much financing each studio is going to stand behind, and Peter Jackson's contract has been been sorted as well. Now there's only one real obstacle standing between them and the newly announced February start date:

Unions.

As is widely well known, Peter Jackson would like to film 'The Hobbit' in New Zealand using the same production studios, crews, and locations that came to define the look and feel of the 'Lord of the Rings' series. Trouble is an ongoing dispute between the filmmakers and the Actors Equity (sort of the New Zealand equivalent of the Screen Actor's Guild) has yet to come to an agreement. As of a few days ago, the NZ Herald was even reporting that Warner Brothers was evaluating how much it would cost to take the production to other countries instead.

Currently Jackson is facing allegations that New Zealand actors are being treated unfairly, which is why their union is fighting to establish new, industry-wide standards. It would be a shame if both sides can't come to amicable agreement, as no one wants to see Peter Jackson film 'The Hobbit' in Bulgaria, so we'll keep you updated as soon as there is a decision as to where production will actually take place.