Strapped Indie Producer Village Roadshow Files For Bankruptcy

The company said it slashed costs to save and also tried to sell itself as a whole last year but uncertainty surrounding the pending arbitration, ongoing for three years now, made that impossible, forcing it to file for bankruptcy. It said it has a so-called stalking horse bid of $365 million for its library assets and a DIP (debtor-in-possession) facility to fund operations while under court supervision. A stalking horse bid sets a minimum price for an asset.

The WB arbitration alone has generated more than $18 million 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.”

West Hollywood-based Village Roadshow, in its filing today by Keith Maib who is serving as Chief Restructuring Officer, described its once “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.”

“On February 7, 2022, the Company filed a complaint with respect to WB’s release of The Matrix Resurrections day-and-date on HBO Max and WB’s dispute regarding the Company’s right to co-finance derivative works based on the Film Library assets co-owned with WB predominantly with regard to the Derivative Rights Agreements … The Company accused WB of shutting it out of its legal and contractual rights to co-own and co-finance the sequels, prequels, spinoffs, and other derivative works of the 89 films that the Company funded and co-owns and with respect to which derivative rights are applicable.”

Village Roadshow has produced and released over 100 films since launch in 1997.

Prior to the WB arbitration, Village Roadshow said it “enjoyed a lucrative and well-known co-production and co-financing relationship with Warner Bros. Entertainment Inc. and its affiliates (“WB”) that culminated in numerous and continual successful endeavors. The Company’s most valuable assets are a direct result of this success: the Film Library and the Derivative Rights (each as defined below). Two primary issues led to the decline in the Company’s financial position: (1) the WB Arbitration, which has thwarted the Company’s most profitable business line; and (2) the failed and costly endeavor into the creation and production of independent films and scripted and unscripted television series (the “Studio Business”), which was never profitable.” It said it spent about $47.5 million on development or projects that were either never producer or unprofitable. Its output, including six full-length movies, five unscripted television programs (including two seasons of a game show), and two scripted television series, “was able to realize monetary gain in the requisite time needed to make the venture sustainable.”