Village Roadshow Entertainment Group USA Inc.'s proposed $12.8 million bankruptcy loan would launder a fraudulent transaction and jeopardize Warner Bros.’ creditor and contractual rights in an extensive film library, the Hollywood production company told the US Bankruptcy Court for the District of Delaware on Monday.
The two companies, which together produced 91 feature films, have been duking it out in a costly arbitration over the 2021 release of “The Matrix Resurrections.”
Upon filing for bankruptcy last month, Village Roadshow said the companies’ relationship has already been decimated, and a costly arbitration award “could flatten the company’s balance sheet.”
Warner Bros. on Monday accused Village Roadshow of orchestrating a fraudulent transfer after losing a liability determination. The transaction involved shifting contract rights in future films for $9 to shell entities, then pledging those “derivative rights” to a group of noteholders who also hold equity in the company.
The noteholders—a unit of the Ontario Teachers Pension Plan Board and a fund run by Falcon Investment Advisors LLC—are offering a bankruptcy loan that “seeks to sanitize those transactions before allowing Warner Bros., or any other party, to adequately challenge them,” Warner Bros. said.
To the extent that Village Roadshow needs Chapter 11 financing to run an asset sale process in bankruptcy, it should be limited to $7 million in new money and exclude a proposed a roll-up of preexisting debt that would “infect” the film library assets with prebankruptcy funded debt, said Warner Bros.
The entertainment giant on Monday also separately challenged Village Roadshow’s bid to market film participation rights, saying bankruptcy sale procedures should expressly protect the intellectual property and production consent rights of Warner Bros.
“While Warner Bros. wants to participate in a cooperative process for a value maximizing sale, Warner Bros.’ own rights must be protected in the process,” it said.
A Village Roadshow attorney declined to comment.
Village Roadshow has produced and released more than 100 films, including “Joker” and “Ocean’s Eleven.”
It filed for Chapter 11 amid a liquidity crisis stemming from its conflict with Warner Bros. and the failure of its independent studio business. The Covid-19 pandemic, the 2023 entertainment labor strikes, and the increasing prevalence of streaming companies also contributed to the studio’s challenges, the company said.
Warner Bros. is represented by O’Melveny & Myers LLP and Morris Nichols Arsht & Tunnell LLP. Village Roadshow is represented by Sheppard Mullin Richter & Hampton LLP and Young Conaway Stargatt & Taylor LLP.
The case is In re Village Roadshow Ent. Grp., Bankr. D. Del., No. 24-10475, Objections filed 4/7/25.
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