A clash between Netflix and Relativity Media in bankruptcy court has made public some interesting behind-the-scenes business dealings between the two companies, and in the process shed some light on the evolution of Netflix’s business and of online distribution generally.

In 2010, Netflix entered into a licensing agreement with Relativity under which the studio would deliver 12 features per year for release on Netflix’s subscription streaming service. The agreement provided for payment of seven-figure minimum guarantees, plus additional payments based on theatrical box office performance. The guarantees are partially refundable if the pictures are not released in theaters.

When Relativity declared Chapter 11 bankruptcy, Netflix asked to be released from this agreement. This effort was unsuccessful. The agreement was affirmed and Relativity emerged from bankruptcy with the Netflix deal among its assets.

The latest dispute involved two forthcoming Relativity releases, a Zach Galifianakis comedy called Masterminds, and The Disappointments Room, a horror film starring Kate Beckinsale. Netflix’s deal with Relativity specified the dates on which Netflix could begin streaming them, but those streaming dates were set based on particular theatrical release dates. When the theatrical releases were postponed, Relativity approached Netflix for what it characterized as a “routine” extension of the streaming date. Netflix turned down this request. It took the position that it could stand on the letter of the agreement and begin streaming on the dates originally agreed. This raised concern on Relativity’s part that theatrical revenues would be seriously compromised if the movies were available for streaming before their theatrical release. Relativity interpreted this move as a pretext to evade its payment obligations, and so back the parties went into bankruptcy court.

The bankruptcy judge, Michael Wiles, sided with Relativity, issuing an injunction against Netflix’s plan to start streaming in June. He ruled that the Netflix plan would undermine the integrity of the bankruptcy process. Noting that Netflix had been an active participant in the February, 2016 confirmation hearings for Relativity’s reorganization, Judge Wiles stated that Netflix had an “obligation” to resolve any issues then. The terms under which Relativity was able to emerge from bankruptcy included deals with its lenders predicated on projected revenues from theatrical releases and also from Netflix and other downstream exploitation. All this, Judge Wiles held, would risk being overturned if Netflix were permitted to jump the gun on its streaming rights.

The hearing on Netflix’s motion revealed some intriguing information on history of the two parties’ dealings. Linda Benjamin, who was Relativity’s VP of business and legal affairs at the time, testified that it was quite a coup when Netflix made its deal with Relativity in 2010. Netflix was then still mostly a DVD by mail company, and the Relativity deal was its first shot at acquiring the right to stream first-class motion pictures in the pay-tv window, for which, according to Benjamin, it paid a premium license fee. Netflix soon became concerned that Relativity was slipping sub-prime third party content into the deal, at which point it paid Relativity an enhanced license fee to insure it would only receive prime content, and added the requirement that the pictures receive a theatrical release.

Netflix is still considering its next legal moves, but regardless of the final outcome, the dispute casts a light on the effect that streaming services such as Netflix have had and will continue to have on the motion picture business.