Inside The Bankruptcy Of Marvel’s ‘Eyes Of Wakanda’ Animation Studio

Internal documents have revealed how a cashflow crisis caused the collapse of the external company which created the animation for Marvel Studios’ Eyes of Wakanda streaming show which was released last month.

Eyes of Wakanda is a spinoff of Marvel’s 2018 blockbuster live action movie Black Panther which introduced the Dora Milaje, an all-female special forces team from the fictional African nation of Wakanda. The movie grossed a staggering $1.3 billion and made history at the 91st Academy Awards by becoming the first superhero film ever nominated for Best Picture.

Despite the untimely passing of Chadwick Boseman, who played the eponymous hero, Black Panther spawned a sequel, Wakanda Forever, which hauled in an impressive $859.2 million at the box office despite being released at the height of the pandemic in 2022. The success of the series has been largely attributed to the talent of director Ryan Coogler and Marvel has made the most of it.

In the wake of the movies, Coogler developed Eyes of Wakanda, a four-part animated show which follows Wakandan warriors as they travel the world throughout history to retrieve dangerous but valuable artefacts. The story focuses on Noni, a disgraced former Dora Milaje member who is voiced by Winnie Harlow and goes on a special mission to Minoan Crete in 1260 BC.

The show was a hit with critics and has an average score of 92% on review aggregator Rotten Tomatoes. Audiences weren’t so generous awarding it 52% though this didn’t stop the show from rising to the top of the Disney+ charts after only a few days. However, it didn’t come soon enough to save the company which created its distinctive animation.

Disney is famous for its animation but sometimes engages external studios to create the visuals for its shows and movies. The animation in Eyes of Wakanda has a hand-painted style which was inspired by contemporary African-American artists. It was the product of Axis Studios which was founded in Scotland in 2000 and became the country’s leading animation and visual effects studio.

Widely known for its video game cinematics and trailers, Axis worked on titles such as Halo, Gears of War and League of Legends. It also produced episodic content, animated features and visual effects for film, television and theme parks. It was behind the Lost in Oz series for Amazon Prime Video and Scrooge: A Christmas Carol for Netflix, as well as several episodes of the streamer’s Love Death + Robots. Axis’ handiwork can also be seen in the Tom Hanks film Otto and Aardman Animations’ A Shaun the Sheep Movie: Farmageddon.

This glittering track record didn’t stop the curtain coming down on the company. The one-two punch of the pandemic followed by the Hollywood strikes sent it reeling whilst soaring inflation pummelled its profits. However, its demise was ultimately driven by the way the industry works.

Internal documents reveal that “the industry experienced a downturn in production commissions post-pandemic, particularly in the video gaming sector which comprised the majority of the company’s client base. The company was also impacted by the US writer strikes which took place from May to September 2023, and the related actor strike which ran until November 2023. These significantly pushed out production schedules. Allied to this, significant cost price inflation, particularly in respect of employee costs, further eroded margins and overall profitability.

“The company’s workflow was such that only a small number of projects were active at one time and, due to their relatively large individual size, this could produce cashflow pressures until large completion payments were received or in the event significant gaps arose between commissions.

“Whilst the directors considered there to be a strong pipeline of work, with a significant project due to commence in early 2025, delays in the commencement of projects began to emerge. This resulted in the company experiencing cashflow difficulties, as initial payments – which would normally be received from customers at the commencement of projects – were consequently deferred.” It cast a dark spell on its finances.

Whilst historically profitable and cash generative, financial statements for the studio’s parent company Axis Productions show that it made a consolidated loss of $1.1 million (£839,000) on $32.6 million (£25.7 million) of revenue in the year to November 30, 2023. Crucially, it had cash reserves of just $380,000 (£300,000) showing how little leeway it had if the situation worsened. That is precisely what happened.

The documents state that “the company was unable to meet its payroll obligations in June 2024 and also had to defer payments to freelance contractors.” They add that “in light of the Company’s ongoing cashflow difficulties its directors had been taking external professional advice for some months. As matters continued to deteriorate it was subsequently deemed appropriate for an insolvency practitioner to be consulted in late June 2024.”

The following month the company collapsed into administration – the British equivalent of Chapter 11 bankruptcy. It was put into the hands of administrators Interpath Advisory and their assessment was bleak. Given the lack of significant ongoing work, the high level of ongoing operational costs, the arrears in employee wages – which were up to six weeks by then – and a lack of available funding, Interpath concluded that the company could not continue to trade.

Presumably the work on Eyes of Wakanda was already complete as the closure didn’t affect the show or Disney as it didn’t have any investment in Axis. The vast majority of its 151 employees were made redundant and only four members of staff were retained to assist with the closure of the company. Even they have since been made redundant.

One of the workers was Arianna Querin a 3D environment artist who worked on Eyes of Wakanda. She recently posted some of her work on the show online along with the comment that she is “incredibly proud to share some of my work I did for ‘Eyes of Wakanda’, a TV show produced by Marvel. This project holds special meaning for me – not only because creatively I had lots of fun, but also because it was one of the final shows developed at Axis Studios before it closed its doors.”

Querin has since got freelance work with Blur Studio, the renowned VFX house which worked on Deadpool, Avengers: Age of Ultron and Sonic the Hedgehog. Others have not been so lucky.

Internal filings show that one of the largest payments Interpath has been able to secure since Axis collapsed is $44,217 (£32,994) from Sony’s Guerilla Games division. The filings add that this “was payable in respect of the provision of certain files which were created pursuant to a contract undertaken by the company prior to its insolvency.” The payment is a drop in the ocean.

The documents reveal that Barclays Bank is owed $980,000 (£732,000) for the company’s overdraft, Britain’s tax authority is due $2 million (£1.5 million) and the employees have been left $608,000 (£454,000) out of pocket. Interpath says it does “not anticipate that any return will become available to any class of creditor” so this sorry situation is set to stay that way.

Additional reporting by Christian Sylt.