Netflix, Inc. (NASDAQ:NFLX) has sought the Bankruptcy Court’s ruling in the United States to end its agreement with Relativity Media. The streaming media firm also wanted the court to block the confirmation of its reorganization plan. The move is a big blow to the entertainment firm as it was hoping to come out of its bankruptcy. The video-on-demand service provider charged the bankrupt firm of a failure to deliver the least number of films last year.
Doubts Over Delivery Of Films
Netflix, Inc. (NASDAQ:NFLX) has struck a five-year contract with Relativity, and it doubts whether the latter would honor its commitment in the current year, as well as, the next year. The company disclosed that a studio, which was founded by Ryan Kavanaugh, fell short of getting enough financing, as well as, in establishing a new management structure. As a result, the streaming media firm doubts the entertainment firm’s ability to continue as a movie maker practically.
The video-on-demand service provider indicated that it was not given any kind of assurance that Relativity Media would perform the complex and the extensive obligations that have been mentioned in the license deal. Its objection was one of the several such objections as the deadline was nearing. CIT Bank too indicated that it was not protected by the reorganization of Relativity Media.
Motivations Questioned
However, Relativity Media has questioned the motivations of Netflix, Inc. (NASDAQ:NFLX). A spokesperson said that the objection was a blatant attempt to use the Chapter 11 Bankruptcy protection process to renegotiate the agreement once again. The agreement, which was struck in 2012, will expire only in 2018. Its lawyers were confident that they would be in a position to address all the issues to get the reorganization plan rolling on February 1.
Since 2010, Netflix, Inc. (NASDAQ:NFLX) has been providing millions of dollars to Relativity to supply it with films. The company indicated that the payments were added to the balance sheet of Relativity. The streaming media said that several details were not clear and the planned new capital was simply hypothetical.
