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Netflix and Relativity Settle Long-Running Dispute in Bankruptcy Court

Settlement helps retain value of the Relativity estate and paves the way for sale to UltraV Holdings

Netflix and Relativity Media have squashed what has been an almost four-year-long legal battle, allowing the embattled indie studio to move forward with its bankruptcy sale to UltraV Holdings.

Lawyers for both companies told U.S. Bankruptcy Court Judge Michael Wiles that they’ve agreed to broad terms of a wide-ranging settlement resolving a 2010 licensing deal that obligated Netflix to pay a premium rate to distribute Relativity’s films, according to The Wall Street Journal.

“Today’s settlement with Netflix resolves nearly four years of litigation and other disputes that threatened the value of the Relativity estate,” Colin Adams, Relativity’s chief restructuring officer, said in a statement to TheWrap. “The settlement helps preserve the value of the Relativity estate for creditors, paving the way for the asset sale to UltraV Group, and granting UltraV the unquestionable right to stream up to 30 films on Netflix. We look forward to closing the sale to UltraV and winding down the Relativity estate.”

Relativity’s distribution deal with Netflix had been one of the studio’s most prized assets. The output deal was set to end at the end of this year.

Under terms of the settlement, Netflix is expected pay Relativity about $7.2 million, which includes millions of dollars in licensing fees it withheld from the studio during the legal standoff, the Journal reported.

In May, Relativity filed for Chapter 11 bankruptcy for a second time back in two years and announced it had entered an agreement with UltraV — a joint venture of funds managed by Sound Point Capital Management and RMRM Holdings — to sell the firm all of its assets.

In its May filing with the court, Relativity said it had somewhere between $500 million and $1 billion in debt, compared with $10 million-to-$50 million in assets.