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South Korea’s JS Communications — once the stalking horse bidder to acquire Rhythm & Hues — has agreed to accept a $300,000 break-up fee, closing another chapter on the rollercoaster bankruptcy and sale of the embattled visual effects company. The settlement is contingent upon court approval.
R&H, which handled the majority of the Oscar-winning effects on Life of Pi, filed for chapter 11 bankruptcy protection Feb. 13 and had been working toward a quick sale of the company.
During the late March auction, JS Communications filed a conditional objection—which came down to whether the winning bid, submitted by a wholly-owned subsidiary of Prana Studios, met the requirements to trigger the payment of a breakup fee to JS.
During the auction, 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.
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. It did however participate in the auction, which began on March 27th. The winning bid was approved by the Bankruptcy Court on March 29.
Financial advisory firm Houlihan Lokey, led by director Peter S. Fishman, served as lead financial advisor in the sale of R&H. Bob Baradaran and Brian L. Davidoff of Greenberg Glusker serve as legal counsel to R&H.
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