Future of Rhythm & Hues Still Undecided
Those waiting to hear the results of the bankruptcy auction for troubled visual effects studio Rhythm & Hues will need to wait at least one more day.
R&H and its counsel, Greenberg Glusker, have asked the court to continue its hearing at 10 a.m. PT Friday and planned to reopen the bidding discussion at 4 p.m. Thursday.
The auction was scheduled to begin Wednesday morning. It went on until 2 a.m. and continued Thursday at the offices of its reorganization counsel Greenberg Glusker.
Mumbai-headquartered Prime Focus -- which also maintains bases in Los Angeles, New York, London and Vancouver -- is believed to be one of the remaining bidders. The company offers visual effects, animation and 2D-to-3D conversion among its services, and it upcoming work includes The Great Gatsby and White House Down. On March 20, Hong Kong-headquartered private-equity firm AID Partners Capital Limited made an investment of $10 million into Prime Focus. AID Partners also has an investment in Legendary Pictures, for which R&H is currently completing work.
A Chinese company, China Lion, also was thought to be a remaining bidder, though the company denied this via a tweet that read: "China Lion is NOT involved in R&H bidding."
Thursday morning, South Korea’s JS Communications filed a conditional objection in connection with the auction. JS had pulled out of being the stalking-horse bidder after it missed its court-mandated deadline of March 19 to execute a binding asset sale and purchase agreement in connection with its stalking-horse bid.
But in Thursday morning’s filing, the company argued that the R&H has “invited bids that improperly violate this court’s procedures order so as to deny JS its court-approved breakup fee.”
Specifically, it cited the court order that all bids increase the cash component by at least $525,000, so as to trigger and fund the $425,000 breakup fee. The document said, “This court should not tolerate such a shell game.”
R&H, the company behind the majority of the Oscar-winning VFX in Life of Pi, filed for chapter 11 bankruptcy protection Feb. 13.
The company remains operational thanks to $17 million in loans from Universal and Fox enabling the studio to continue work on Universal's R.I.P.D., scheduled for release July 19, and Fox's Percy Jackson: Sea of Monsters, due out Aug. 16.
Also keeping R&H going is $5 million in financing from Legendary, which will pay R&H for the completion of VFX work on its movie Seventh Son, which Warner Bros. plans to release Oct. 18. R&H is a co-investor/co-producer on this film.