Rhythm & Hues filing Chapter 11 bankruptcy

Rhythm & Hues filing Chapter 11 bankruptcy

Buyers circling; management meeting with employees en mass

It has been a Dickensian week for Rhythm & Hues Studios: the best of times, the worst of times.

Weeks after “Life of Pi” snagged an Oscar nomination largely on the strength of R&H’s work, days after its winning four Visual Effects Society Awards, and just hours after winning the BAFTA for visual effects, the El Segundo-based visual effects studio filed for Chapter 11 bankruptcy.

Prime Focus, the India-based visual effects and 3D conversion company, had hoped to buy Rhythm & Hues and negotiations were under way through last week. However Prime Focus was unable to assemble the necessary financing and its proposed deal to acquire R&H was withdrawn. On Sunday, even as the BAFTAs were being handed out in London, R&H began calling its employees and clients to inform them of the move.

Unconfirmed reports of the Chapter 11 filing appeared on the VFX Soldier blog around 10:00 p.m. Sunday night and Variety was able to confirm them about 90 minutes later. Variety’s sister publication Deadline.com reported that some R&H workers had been asked not to report for work on Monday.

The news was met by an outpouring of sadness and sympathy by visual effects artists. R&H is known for its worker-friendly management and has enormous goodwill in the vfx community — unlike some other companies, including the previous management of Digital Domain, whose demise was widely celebrated.

R&H management called a company-wide meeting at the California HQ for 10:30 a.m. Pacific Time. Company has branches in Vancouver, Taiwan, Malaysia and two in India. Company did not respond to requests for comment prior to that meeting. However insiders say management is optimistic about the company’s future despite the bankruptcy.

Work on studio projects at R&H is said to be continuing, and are likely to meet different fates. One insider said Fox, which has the next “Percy Jackson” pic at R&H, and Universal, with “R.I.P.D.”, will probably fund the completion of their pics, while Warner Bros. will have to take its three pics, “300, Battle of Artemesia,” “The Seventh Son” and “Black Sky,” on a case-by-case basis.

R&H is famed for its creatures and animals and created the digital animals on “Life of Pi.” It uses proprietary software, which increases training time for artists that join the company and makes it hard for its studio clients to pull animation work in progress and hand it to another facility. To do so essentially means starting over.

Several suitors are reportedly ready to bid on R&H in bankruptcy. It is possible Prime Focus could make another run at the company at a reduced price. Prime Focus, a relative newcomer to the vfx scene that hasn’t yet reached the upper tier of vfx studios, was also interested in acquiring Digital Domain when it went through bankruptcy in September. It appears to be interested in making a strategic move to leap to the upper echelon through a merger or acquisition

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