After a costly three-year legal battle with Warner Bros., the company that produced enormously successful films such as “The Matrix” and “Joker” filed for Chapter 11 bankruptcy on March 17th.

Village Roadshow Entertainment Group, founded in 1989, filed for bankruptcy in Delaware, saying that a lengthy legal battle with Warner Bros. was a “major factor” in its filing.

The company said it made deep cuts to preserve the entertainment firm, even trying to sell the entire business in 2024, but the looming legal battle with Warner Bros. crippled it. Now in bankruptcy, Village Roadshow said it has a “stalking horse” bid of about $365 million for the company, which would include its valuable library and debtor-in-possession facility. In bankruptcies, a stalking horse bid refers to an offer setting a minimum price for the sale of assets.

Village Roadshow has produced and released over 100 major films throughout its existence, such as the Matrix series, The Great Gatsby, Mad Max, the Ocean’s series, and many more.

The lawsuit and subsequent arbitration have led to the demise of a successful 25-year working partnership between Village Roadshow and Warner Bros.

The initial lawsuit was sent to arbitration after a judge agreed with the defendant Warner Bros. that had requested the move. After the judge’s order for arbitration, Village Roadshow withdrew its motion to legally make Warner Bros. include the company on a minimum of fifteen projects in development. Village Roadshows alleged that Warner Bros. was keeping the production company out of those projects purposefully. After Village Roadshow withdrew its motion, Warner Bros. objected.

“Upon review of the Court’s tentative rulings, Village hereby waives its right to the May 27, 2022, hearing on WB’s Motion to Compel Arbitration and WB’s Motion to Strike and accepts the Court’s tentative rulings on the motion to compel arbitration and the motion to strike as final,” Village Roadshow said in a filing. “The ruling on the motion to compel arbitration should deem Plaintiffs’ Motion for Preliminary Injunction moot.”

In court documents, Village Roadshow said that the years-long legal fight with Warner Bros. cost it $18 million in accounting and legal fees. The suit centered around the film “The Matrix Resurrections.”

The lawsuit pitting Village Roadshow against Warner Bros. was based on claims that Warner Bros. was in breach of contract after the company released the franchise movie “The Matrix Resurrections” in theaters while also releasing the film on the same day on HBO Max. After filing the suit, Village Roadshow added more claims against Warner Bros., such as alleging it was being intentionally excluded from being a financial partner and owner on dozens of projects such as remakes of franchise films that Village Roadshow claimed it owned, such as Sherlock Holmes, Ready Player One, and more.

The entertainment industry was following the lawsuit because Hollywood productions often incur battles, sometimes legal, between talent and media giants that now embrace streaming services with massive audiences.

Village Roadshow believed that moving its lawsuit out of the public eye and into private arbitration would create irreversible damage to the company.

In a statement from Village Roadhouse released by its attorney Mark Holscher, the company said that WB has made clear that it believes it can continue doing exactly what it has been doing. Indeed, given WB’s current position with respect both to releasing these films on HBO Max and refusing to proceed with projects unless Village Roadshow relinquishes its rights, there is an imminent threat that Village Roadshow’s rights on all of these projects are at risk of being eliminated or at least significantly and irreparably impaired.

Warner Bros. said it used a “day-to-day” release strategy from Covid days, arguing and alleging that Village Roadhouse “refused to honor its commitment to pay their share of production costs, rejecting the opportunity we offered to de-risk them from any financial underperformance.”

The bankruptcy filing of Village Roadhouse is regarded as the end of an iconic Hollywood company. In a statement about its chapter 11 filing, the company wrote, “Ultimately, key stakeholders recognized that the Company’s liquidity position was insurmountable in the face of the ongoing legal dispute with WB and no reasonable expectation of a productive go-forward line of business.”