I can't imagine how they would have breached their contract, so that definitely rings as false to me. They probably just let their licensing agreement lapse.
I understand that DIC was taking something of a risk when they licensed Sailor Moon. Anime wasn't exactly mainstream popular back then, and being a female-driven action series, Sailor Moon wasn't exactly like any show that had been a proven success in North America. Obviously they looked at the series' toy sales figures for Japan and Europe and thought it was a risk they were willing to take, but I get why they'd initially only front the cost to dub the 65 episodes needed for syndication, and when the series was met with a lukewarm reaction in the States, even though it was really popular up in Canada, I also get why they didn't get around to dubbing the remainder of R until Irwin/Bandai finally coughed up the dough.
But I do wonder about why they chose to make Sibling Rivalry the last episode of the 65. It's such a weird place to leave things at. As I see it, they had three and a half options:
1a. Skip an additional two episodes so that (what became) "Rubeus Strikes Out" would serve as the 65th episode, wrapping up the Rubeus arc and serving as a much better stopping point.
1b. Skip one additional episode and condense the Rubeus conclusion two-parter into one episode a la "Day of Destiny"
2. Dub every episode, ending with the conclusion of the Doom Tree arc, and cobbling together six additional episodes out of the existing footage. (They could have done a sing-a-long episode consisting of montages set to the series' vocal tracks, with extended versions of the theme song and Carry On to pad out the run time; they could have done a "Best of Serena" episode, a "Best of Amy" episode, etc; done an episode where Malachite uses the powers of the Negaverse to send the Scouts into a time warp where they have to defeat previous monsters again to get back to their normal time; they could have even just edited some of the Black Moon arc episodes so that they took place during the Negaverse and Doom Tree arcs.)
3. They could have skipped every nonessential episode, combining episodes if necessary, so that they could cover Classic and R within the 65 episodes.
Those would have been more logical choices to me, but whatever. I do wonder though... Had the series been more successful, would they have dubbed the rest of R right away and gone after the rest of the seasons, or do you think no matter what DIC was only gonna dub those 65 episodes and that was it? (I know a lot of series back then had a set number of episodes they were going to make and that was it, no matter how successful the show might have been.) What exactly was their expectation for the series? What was their ultimate goal/vision (besides make money)?