My understanding of the dispute is that it's a money/distribution rights matter.
Criterion's license was renewed through a third party company, which Criterion understood to have the authority to negotiate it. Turns out that Merchant Ivory had a different idea about that. So Merchant Ivory sued both Janus and the third party, essentially saying "these guys didn't have that authority and you shouldn't have worked through them." I note that Merchant Ivory had no complaint to speak of about the QUALITY of the discs. It was simply a matter of who negotiated the rights to release them. The fact that the matter settled with both sides paying their own costs tells me this was not a huge matter.
In the end here, Criterion's license lapses and these titles go out of print. Merchant Ivory is free to try another distributor if they believe this will get them a better situation. Frankly, I think they would have been better off staying with Criterion. But licenses lapse all the time.