A source close to one of the parties contacted us with some information on Pinocchio which basically confirms what Grimly said. The source also elaborated on some of the behind the scenes stuff involved. The source wrote:
It's a combination of the company being unable to get any kind of financial backing for production/distribution and a lack of interest from Henson management. They're so scared to actually try and make a movie that they only want to go for things that are as safe as possible, and the Hensons decided that it shouldn't be worked on any more. Which means the project is probably dead forever, unless [Guillermo del Toro] decides he wants to make it in a billion years when he's got more financial cred around town.
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