Legendary Pictures’ Chinese venture Legendary East has parted ways with Chinese distributor Huayi Brothers.

The split could make it easier to find investors for Legendary East’s fundraising efforts, according to sources with knowledge of the discussions.

On Friday, news broke that Paul Y. Engineering Group of Hong Kong had put its proposed $220.5 million investment in Legendary East on hold due to shaky financial markets.

Investors balked at the size of the Huayi Brothers’ planned stake in Legendary East, say sources with knowledge of the fundraising effort. Under the original proposal, PYE planned to take a 50% stake in Legendary East. Thomas Tull’s Legendary Pictures would have a 40% stake in Legendary East and the Huayi Brothers would take the remaining 10%.

But the Huayi Brothers’ share proved too large for some financiers to swallow, according to sources with knowledge of the discussions, and contributed to Legendary East’s decision to let lapse its self-imposed deal deadline of Dec. 31. Legendary East had imposed an arbitrary deadline, and its relationship with Huayi Brothers dissolved when that deadline passed.

Several U.S. companies including Legendary and Relativity are working hard to get a toehold in the massive Chinese market, but the tough financial climate is making some deals harder to finalize.

In a statement on Friday, PYE said it intended to restructure the proposal and relaunch the transaction in the new year.

“We maintain that diversification with an investment in Legendary East is beneficial to PYE,” PYE chairman James Chiu stated in the release.

PYE, a publicly traded company on the Hong Kong stock market, is attempting to raise the Legendary East funds by placing new company stock with private equity firm AID Partners, and through UBS AG, to other institutional and individual investors.

With its 10% stakeholder out and terms of the deal being reworked, sources with knowledge of the discussions said investors appear more interested in closing a stock arrangement. Since the Huayi Brothers’ planned 10% stake proved unpalatable for investors, it’s likely that Legendary East will look to enlist multiple distribs to replace Huayi’s exclusive arrangement.

Legendary Pictures’ Thomas Tull paired up with Chinese-born Hong Kong media and finance entrepreneur Kelvin Wu to create Legendary East in June. The parties proposed making one or two big-budget pics a year, beginning next year, with commercial appeal both in China and worldwide. Company would accomplish this in part by producing mainly English-language pics that feature themes based on Chinese history, mythology or culture.

A spokesperson for Legendary and Legendary East declined to comment but released a statement last week that confirmed the latter would relaunch its planned fundraising effort.

“Legendary East will issue a formal announcement when the new structure and transaction is solidified.”

Huayi Brothers could not be reached for comment.