Village Roadshow Entertainment Group has filed for Chapter 11 bankruptcy protection.
The film production and financing company that worked on franchises like The Matrix, Ocean’s Eleven, Joker, The Lego Movie and Wonka filed for bankruptcy in U.S. Bankruptcy Court for the District of Delaware Monday.
In the filing, Village Roadshow framed its ongoing arbitration dispute with Warner Bros. over The Matrix Resurrections as a turning point, effectively ending what had been its most lucrative business arrangement. Village Roadshow had sued for breach of contract after WB released the franchise film on Max the same day it was released in theaters, and has cost the company $18 million in legal fees and counting.
“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,” according to the filing, signed by Accordion Partners managing director Keith Maib, Village Roadshow’s restructuring advisor.
“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,” the filing continued. “While the WB Arbitration does not impact the Debtors’ entitlements (including rights to receive payments in connection with) or ownership stake in its most valuable assets, the Library Assets, it has eradicated the Company’s potential income stream from the exploitation of the Derivative Rights and any new projects that could be co-financed by the Company and WB, both of which, prior to the WB Arbitration, were vital to the Company’s ongoing success.”
The company listed assets valued at $100 million to $500 million, and liabilities of $500 million to $1 billion.
Most of the value is in the form of the company’s library assets, with CP Ventura LLC attached to the filing as a “stalking horse” bidder for those assets at $365 million. The filing indicates that there was at least one other interested bidder for the library assets.
Village Roadshow has had a difficult few months leading to Monday’s bankruptcy filing. CEO Steve Mosko stepped down earlier this year, and multiple rounds of layoffs have left only a skeleton staff.
Last year the WGA added Village Roadshow to its strike list after it failed to pay writers, underscording the dire financial straits it was facing.
The filing indicates that Village Roadshow had enlisted Goldman Sachs to advise it on a possible sale last year and had found an interested buyer, but the WB arbitration “stifled the ability to close the transaction.”
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