Yesterday, it was announced that Digital Domain Media Group was under Chapter 11. Today, a bankruptcy judge overseeing the bankruptcy filing of Digital Domain rejected a plan to sell the special effects and animation company to investors. A private equity firm, Searchlight Capital Partners, offered $15 million for the company to purchase the company out of bankruptcy. The judge, Brendan Shannon, said the speed of the proposed sale is unprecedented and was worried that this would not give creditors enough time to assess the fairness of the process. The bankruptcy judge further said it would be better to hold an auction on October 2 after a September 20 hearing to set up the rules for bidding.
This has started a stir in the industry and Prime Focus World, famous for its work on Avatar, already showing interest to join the bidding process. Digital Domain Studios was the creation of director James Cameron and responsible for movies such as Titanic and Pirates of the Caribbean.
Digital Domain Media Group entered the bankruptcy filing with only $50,000 in the bank for payroll, stated by the for the company, Robert Feinstein. He said, “The studios are freaking out” worrying that there might be a delay on special effects work already planned for films slated for release. The company opened in Port St. Lucie Florida because of promises of land, financing and cash worth a grand total of $135 million. Much of this is yet to materialize making it harder for them to keep the doors open and being part of the cause of filing for bankruptcy. On Friday, the company closed Studios in Florida, sending home 252 of 272 employees.
Many companies nationwide are struggling in this economy to stay out of bankruptcy and this is just another example. In this down economy we can expect to see many companies consolidating and filing for bankruptcy.