A federal bankruptcy judge on Friday approved the sale of Oscar-winning visual-effects company Rhythm and Hues to a company connected to Los Angeles-based Prana Studios, which had the winning bid in a bankruptcy auction for the company.
On the same day, Berkeley, Calif.,-based Tippett Studios — another company in the troubled VFX business — said that it was laying off 40 percent of its workers, according to The Hollywood Reporter.
The judge's decision in the bankruptcy of El-Segundo-based Rhythm and Hues was just the latest development in the company's rocky recent history. The company is only one of many that face a Hollywood conundrum: While visual effects play a huge role in blockbuster films, the visual-effects business model has been struggling in Hollywood.
On Friday, Los Angeles U.S. Bankruptcy Court Judge Neil Bason approved the purchase of Rhythm and Hues by Prana Studios affiliate 34x118 Holdings Inc., which was the winning bidder after a two-day auction.
Deadline Hollywood estimated the takeover's value at about $17 million.
The new buyer won a drawn out auction for the Oscar-winning "Life Of Pi" company late last night with a winning bid valued at about $17 million. Prime Focus and Chinese company Brave Vision, represented by China Lion President and co-founder Jiang Yanmin, were also in the running. (Other outlets misreported China Lion as a bidding company yesterday, but it was not involved.)
After more than 25 years in business, Rhythm and Hues filed for Chapter 11 bankruptcy protection last month. Just weeks later, it won the visual effects Academy Award for "Life of Pi."
Rhythm and Hues had more than 700 employees in Southern California, but when the company filed for bankruptcy protection, it was forced to lay off more than 200 people. Many of those people had worked for more than a year on "Life of Pi."
While Prana Studios has production offices in Los Angeles, it also has a very active base in Mumbai, India. It's currently providing animation production services for Disney's upcoming 3D animated feature film "Planes," which is due in theaters this summer.
Meanwhile, Tippett Studios laid off employees, according to The Hollywood Reporter:
Berkeley, Calif.-based VFX company Tippett Studios laid off 40 percent of its workforce Friday, the company's CEO and president Jules Roman confirmed to The Hollywood Reporter, with the possibility of more pink slips coming.
More than 50 visual effects designers were let go, leaving a staff of 100 full-timers still working at the studio, whose recent work is on display in such blockbuster films as "Ted" and "Twilight: Breaking Dawn."
Last September, another visual effects heavyweight went bankrupt. Venice-based Digital Domain came out of bankruptcy quickly with two new owners: a company from China and one from India.
The globalization of visual effects was tough on Rhythm and Hues and Digital Domain. Both invested heavily in overseas facilities, as countries like Canada and India offer film subsidies and tax incentives.