Netflix says that it will seek an expedited appeal and stay of a judge’s decision Friday that prevents it from streaming the Zach Galifianakis comedy “Masterminds” next month, ahead of a planned theatrical release for the film on September 30.
Judge Michael E. Wiles, presiding over the Relavity bankruptcy proceedings, ruled that an early streaming release of the film and the Kate Beckinsale horror flick “The Disappointments Room,” would effectively gut a reorganization plan he previously approved for the troubled studio. Netflix appealed to stream both movies before their theatrical releases. “The Disappointments Room” is due in theaters in December.
“Sometimes it falls upon the shoulders of one party to be the bearer of unpleasant news,” Netflix’s attorney, Stephen Mick, said on Monday. “And the unpleasant news here is that Relativity and the bank and the bond company all negotiated, all signed, and all agreed to a contract that they have not come to like.” The streaming company had asked the judge to allow the case to be settled by an arbitrator, as called for in the original contract between the two.
Wiles told lawyers for Netflix that he believed their appeal to pre-empt theatrical releases of the two Relativity films with an online showing had come belatedly, after they failed to raise the issue in a protracted bankruptcy in the judge’s court. He said he had approved Relativity’s bankruptcy plan based on a very specific set of economic projections, which were heavily reliant on theatrical releases for “The Disappointments Room,”and “Masterminds,” a caper film that also stars Kirsten Wiig.
Netflix contended that Judge Wiles was extending his jurisdiction beyond what the law allowed. Since Relativity recently emerged from bankruptcy, disputes with its contract holders should be decided in the normal course of business, not by returning to the bankruptcy court, they contended.
But Wiles rejected that argument, saying that the Relativity/Netflix pact was central to the reorganization of the studio and that the impacts of their contract impacted many other parties to the Chapter 11 case, including release funder RKA film financing and the production lender CIT Bank.
Netflix’s attorney contends that “there is an attempt to strip us of a benefit that we have under a contract without giving us the protections and the rights that we would have had had they done it correctly inside the bankruptcy.”