Village Roadshow Entertainment Group, the renowned film producer and financier that has backed “The Matrix,” “Ocean’s Eleven,” “Joker” and “The Lego Movie” franchises, has filed for bankruptcy protection in the U.S.
The company filed for Chapter 11 in Delaware on Monday, with $223.8 million in asset-backed secured notes and $163.1 million of senior secured debt, according to court documents. The news comes amid a long-drawn out and expensive legal battle with its long-standing partner Warner Bros. over “The Matrix Resurrections,” a 2021 sequel to the sci-fi series.
Village Roadshow had sued for breach of contract after WB released the feature on Max the same day as theaters.
“The company historically enjoyed a prolific co-production, co-financing and co-ownership relationship with WB, which included the production, ownership and derivative rights flowing from 89 titles – including the ‘Matrix’ franchise – and comprised the vast majority of the Debtors’ business,” the documents filed on Monday read.
“The WB arbitration has caused the company to incur more than $18,000,000 in legal fees, nearly all of which remain unpaid, and presents the threat of a potential arbitration award that could flatten the company’s balance sheet, but that is not the full extent of its impact.”
The filing added: “Even if the WB arbitration is resolved, the company believes that it has irreparably decimated the working relationship between WB and the company, which has been the most lucrative nexus for the company’s historic success in the entertainment industry.”
Like many entertainment companies, Village Roadshow — based in both the U.S. and Australia — had struggled with both the slump in production from the pandemic and the Hollywood writers’ strike, which delayed film shoots.
Village Roadshow was founded in 1997 and has produced and released over 100 films, also including “Mad Max: Fury Road,” “Ready Player One” and “Wonka.” In 2017 it sold a controlling interest to Falcon Strategic Partners and Vine Media Opportunities.
In 2018, the company began developing its own film and TV projects, without a major studio partner. According to a court filing, those efforts resulted in six movies and seven TV shows — none of which was profitable. In December, the Writers Guild of America put the company on its “strike list,” after the company failed to pay its writers on several projects.
The company has been exploring a sale since early 2024, after the leadership came to the conclusion that its liquidity crisis was becoming insurmountable, according to the court filing. At the time, the company employed 45 people. It has since trimmed its staff to 11, as it narrowed its focus to completing the sale process.
The bankruptcy filings state that a stalking horse bidder — identified as CP Ventura LLC — has agreed to pay $365 million for the company’s library. The purchase agreement identifies the buyer’s representatives as Steven Kram and Steven Blume, the co-founders of Content Partners LLC, an investment firm that acquires film and TV libraries.
Warner Bros. filed for arbitration in early 2022, as the relationship with Village Roadshow was at a breaking point. According to WB’s court filings, Village Roadshow had failed to provide a payment exceeding $100 million under its co-financing deal on “The Matrix Resurrections.”
Village Roadshow filed its lawsuit a week later, arguing that the simultaneous release in theaters and on Max had cannibalized the film’s box office results. Village Roadshow argued that under the circumstances, the company could not logically make the payment, which amounted to a free subsidy to Max in exchange for nothing.
WB argued that their deal required only a wide theatrical release, not an exclusive theatrical release, and that the whole dispute was governed by the arbitration clause.
The dispute went well beyond the “Matrix” issue, as Village Roadshow argued that Warner Bros. was shutting it out of its rights to co-finance as many as 15 projects.
In 2022, a judge denied Village Roadshow’s request for an injunction and ordered the case to arbitration, where it remains. A hearing is scheduled for April 25.
From Variety US