Village Roadshow has agreed to pay Warner Bros. $57 million to resolve its liability in an arbitration over financing on Matrix Resurrections.
The figure was reduced from over $125 million after the financier filed for bankruptcy. In 2023, an arbitrator found that Village Roadshow breached a series of deals involving the Matrix films by failing to pay its $107 million share of the cofinancing agreement, The Hollywood Reporter learned last year.
The legal battle started in 2022 when the studio filed two arbitration demands against Village Roadshow, one over the Matrix Resurrections and the second over Wonka and other properties the financier shared the rights to with Warner Bros. The financier responded by filing a headline-grabbing lawsuit against Warner Bros. in California state court, accusing the studio of breach of contract over its decision to release the Matrix sequel simultaneously on HBO Max and in theaters. The case went dark shortly after, with a judge moving it to arbitration.
An arbitrator ultimately found Village Roadshow breached the co-ownership and distribution agreements. The financier also lost on claims it advanced against Warner Bros. for unfair competition, breach of contract and breach of implied covenant of good faith and fair dealing, which covers bad faith dealings. The studio was awarded over $107 million in damages plus $17 million in interest.
When Village Roadshow moved for Chapter 11 bankruptcy protection last year, Warner Bros. filed a claim for the $125 million judgment. On Monday, they moved to dismiss the case after reaching a $57 million deal in bankruptcy court to resolve the debt. The agreement covers the Wonka dispute, though Warner Bros. said it would dismiss the case without prejudice, meaning those claims can be reasserted. The payment was due by Wednesday.
The souring of Village Roadshow’s longtime partnership with Warner Bros. was among the reasons the financier was forced into bankruptcy. The move from the company — once one of the most prolific behind-the-scenes financiers in Hollywood that backed The Matrix and Ocean’s franchises — came after a costly endeavor aimed at creating content in-house and the 2022 lawsuit, which “irreparably decimated the working relationship” with the studio, wrote Village Roadshow chief restructuring officer Keith Maib in a court document. Matrix Resurrections wasn’t the only film at issue in that legal battle. Village Roadshow alleged that it was shut out of cofinancing sequels and remakes to key franchises based on movies it shares the rights to with WBD, including Wonka, Joker and I Am Legend.
One example that predated the Matrix feud: Village Roadshow wanted in on a TV series that was being developing based on Edge of Tomorrow but was told the project wouldn’t move forward if it didn’t relinquish its rights, according to court filings. The studio ended up abandoning the show.
During the bankruptcy, Warner Bros. tried to buy Village Roadshow’s derivative rights to several movies, which give the owner the right to participate in certain sequels and remakes. Alcon, however, emerged the winner, purchasing the rights for $18.5 million. The studio later objected to the sale, submitting a revised bid for $19.5 million that was rejected.
Practical Magic 2 is among the first titles they partnered on.
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