18-03-2025
Hollywood producer behind 'Joker' and 'The Matrix' files for bankruptcy
LOS ANGELES (WJET/WFXP) — Hollywood producer Village Roadshow Entertainment Group (VREG), best known for 'Joker' and 'The Matrix' trilogy, filed for bankruptcy on Monday.
The Chapter 11 bankruptcy, filed jointly with its 33 affiliated entities, comes as the film producer continues to face increasing financial burdens. One of the two primary reasons behind the company's decline is its ongoing arbitration battle with Warner Bros. Discovery.
The legal battle began when Warner Bros. filed for arbitration in early 2022 alleging that VREG had failed to provide a payment exceeding $100 million under its co-financing deal on 'The Matrix Resurrections.' In response, VREG filed its lawsuit a week later arguing that Warner Bros. sabotaged the theatrical release of 'The Matrix Resurrections' by releasing the film on streaming simultaneously with the theatrical debut to boost subscriptions to its streaming platform.
'WB's strategy not only ensured that 'The Matrix Resurrections' would be a bust at the box office, but it also inflicted serious harm to the entire 'Matrix' franchise,' the suit alleged. 'There can be no doubt that the abysmal theatrical box office sales figures from 'The Matrix Resurrections' dilute the value of this tent pole franchise as a film's lack of profitability generally prevents studios from investing in additional sequels and derivative films in the near term.'
According to that lawsuit, VREG said it ended up paying millions to make up for lost box office revenue.
According to Variety, the dispute went well beyond the 'Matrix' issue, with Village Roadshow arguing 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 the case remains active, with a hearing scheduled for April 25.
In the bankruptcy filing, the company's chief restructuring officer Keith Maib said '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,'
As a result of the legal battle, the company was left with over $18 million in unpaid legal fees. The second reason cited in the company's decline is '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.' The venture required approximately $47.5 million in development expenses.
These studio plans followed an ownership change in the late 2010s, and from 2018 to the present, the company had 99 feature films in development, 67 unscripted television series, and 166 scripted television series. Only six feature films, five unscripted television series, and two scripted series went into production. However, these projects failed to generate sufficient profit to sustain the Studio Business. 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.
In February, it became clear to key stakeholders that the company's debt could soon become insurmountable, prompting stakeholders to implement cost-saving measures. The company reduced its workforce in 2024 from 45 employees to just five in the U.S. and six financial professionals in Australia. It also vacated its larger Los Angeles office, opting for a smaller, less expensive space.
The company attempted to sell certain assets out-of-court prior to the filing, which failed. Now, the company's assets will be sold in court following a bidding process. A stalking horse bidder, identified as CP Ventura LLC, has agreed to pay $365 million for the company's library. This bidder will acquire the assets if no other suitable bid is made during the process. The library alone generates around $50 million in annual revenue.
VREG has created a massive library of award-winning blockbuster movies, with over 108 films to its name. Some of these include the aforementioned 'Joker' and 'The Matrix' trilogy; however, their other recognized films include 'The Great Gatsby', 'Mad Max: Fury Road' and 'Charlie and the Chocolate Factory (2005)' just to name a few. In total, their library has amassed over $19 billion in global box office sales, 34 No. 1 openings, 19 Academy Awards, and six Golden Globes.
The case is Village Roadshow Entertainment Group USA Inc, et al., filed in the United States Bankruptcy Court for the District of Delaware, case no. 25-10475.
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