March 13, 2013 1:11pm PT by Eriq Gardner
Bankruptcy Court Approves Process for Selling Rhythm & Hues
Despite some late fireworks, a California federal bankruptcy judge has approved an auction for the sale of VFX house Rhythm & Hues.
The decision to go ahead with bidding came Wednesday in an eight-page order issued by Judge Neil Bason.
South Korea’s JS Communications has been established as the "Stalking Horse Bidder" and will make a $425,000 cash deposit that it will be able to get back if the company ultimately doesn't win the bidding.
Interested buyers will have to make qualified bids by March 22. The auction commences March 27, and a hearing on the approval of the sale of R&H will happen the following day.
In making the decision to go ahead with the auction, Bason noted that he had considered various declarations including the response that was filed by the Committee of Unsecured Creditors.
In that filing, the committee questioned the loans that have been allowed to keep R&H in operation and also the proposed auction, saying that liquidation might be a better approach to the recovery of creditors' money.
That drew an angry response from 20th Century Fox and R&H's lawyers, who defended how the bankruptcy was playing out.
Bason didn't articulate his reasoning in the court documents, but there will be future opportunities for objections to the sale. Parties other than the committee must file oppositions to the proposed sale of assets free and clear of liens, claims and interest by March 25. The committee can file its own objection by March 28, the date in which R&H's future seems likely to be determined.