Rhythm & Hues Hoping For Quick Sale
Bankrupt VFX house Rhythm & Hues must find a buyer by mid-March if it is going to recover out of Chapter 11, the company said in a court filing this week (read it here). The El Segundo-based effects studio, which won an Oscar last month for Life Of Pi after laying off 250 workers and seeking bankruptcy protection, tapped Houlihan Lokey two weeks ago to help with a sale as it continued to operate in the short term. Out of 80 entities contacted by the firm, at least 16 have signed nondisclosure agreements and commenced due diligence ahead of a sale hearing proposed for March 19. But according to court documents, the $17 million DIP loan from Universal and Fox and additional $4.9 million from Legendary allocated toward projects for each respective studio will run out by mid-month. If a buyer is not found by then, Rhythm & Hues says it will be unable to offset overhead costs and maintain staff necessary to secure and execute new work.
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Meanwhile, Rhythm & Hues is reportedly opening a new Taiwan facility this month but says its ongoing Chapter 11 reorganization stateside could adversely affect its international operations. The company says delays in finding a buyer could hamper potential for new work out of its Vancouver outpost, where Rhythm & Hues has received “considerably more requests for bids” as a result of government subsidies, as well as its Asian locations which “are very efficient economically due to lower labor costs” and where it “will be able to further lower costs and increase its profits as it increases the amount of the work it does”.
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