Digital Domain files for bankruptcy
http://www.youtube.com/watch?v=ImhYXQ17oC8
Digital Domain’s latest demo reel. The legendary visual effects house, co-founded by James Cameron in 1993, has just filed for Chapter 11 bankruptcy protection, a week after the closure of its new Florida studio.
Digital Domain has filed for Chapter 11 bankruptcy protection, a week after closing its new Florida studio and laying off around 300 staff.
Digital Domain Media Group announced yesterday that it had reached a deal with private investment firm Searchlight Capital Partners to sell both the Venice-based VFX studio and the group’s other North American subsidiaries – which include Mothership Media – for $15 million.
The company owes just over $214 million to its creditors, set against total assets of $205.0 million. Yesterday’s deal, which is subject to court approval, would see Searchlight clearing all claims relating to that debt.
The sale is the subject of a public auction, with DD required to seek competing bids.
What happens to the remaining staff?
If the deal goes through, Digital Domain staff would be granted at least a stay of execution: the company’s debt holders have agreed to provide it with up to $20 million for operating expenses, including employee pay.
Digital Domain CEO Ed Ulbrich has said that the company is currently “on track to deliver all of our clients’ productions on schedule”.
However, given the risk that Hollywood studios will shift work to other VFX houses if DD’s future remains uncertain, the company is looking to hold the public auction within 10 days – a timescale that one bankruptcy attorney interviewed by Reuters describes as “incredibly short”.
The path to bankruptcy
The news caps what has, frankly, been a lousy year for Digital Domain.
The Motley Fool reports the company had been operating at a loss for five years prior to floating on the stock market last November, running up a debt that the $42 million raised by the public offering did little to alleviate.
The company also drew the anger of many VFX artists after then CEO John Textor boasted in a presentation to investors about the use of student labour to cut costs at DD’s new Florida facility.
Thanks to The Digital Domain Institute – “an unprecedented public-private partnership” with The Florida State University – Textor claimed that 30% off the staff were “not only going to be free [but] actually paying us for the privilege of working on our films”.
Ironically, the venture was to be the cause of Textor’s own downfall. When DD closed the facility after defaulting on a $35 million loan, he resigned abruptly, saying he was in “profound disagreement” with the decision.
http://www.youtube.com/watch?v=Hq2YQN4vxrk
The end of a legend? While studio closures are a fact of life in the VFX industry, few of those threatened are as famous as Digital Domain. The studio has won seven Oscars, the last for The Curious Case of Benjamin Button.
While VFX professionals have become used to studio closures, with recent casualties including both C.O.R.E. Digital Pictures and CafeFX, none were as large – or as famous – as Digital Domain.
Founded nearly 20 years ago by James Cameron, Stan Winston and Scott Ross, the company has won seven Academy Awards.
Even if the current deal – or the result of the public auction – enables Digital Domain to remain in the visual effects business, today’s news sends an uncomfortable signal to US-based artists.
We knew times were tough, but few realised that they were quite this tough.
Read Digital Domain’s official public statement about its bankruptcy petition