LOS ANGELESâ€"As expected, Rhythm and Hues, the El Segundo, Calif.-based visual effects supplier, has filed for protection under Chapter 11 of the United States Bankruptcy Code, and the filing shows that its principal customersâ€"20th Century Fox, Universal Studios and Warner Brothersâ€"have split in their approach to the company’s financial woes.
According to filings, made on Wednesday with the bankruptcy court in Los Angeles, Fox and Universal agreed to extend credit that will allow the company to proceed with work on their films, presumably including Fox’s “Percy Jackson: Sea of Monsters†and Universal’s “R.I.P.D.â€
But Warner, according to the effects company’s motion, which seeks extra time to file a schedule of assets and liabilities, has demanded the “return of all materials†related to three of its scheduled movies. Two of those were identified in the filings as “Black Sky,†a thriller from the company’s New Line Cinema unit, and “300: Rise of an Empire,†wich was made in partnership with Legendary Entertainment, and is set for release in August. The third film, according to a person who was briefed on the matter but spoke on condition of anonymity because of the court proceedings, is “The Seventh Son,†a Legendary film, which is scheduled for release by Warner in October.
According to the filings, Warner has claimed that it is owed $4.9 million, which it has paid for work that is not yet completed.
“Unfortunately, with respect to the current projects,†a Rhythm and Hues filing noted, the company “will be unable to complete them at the bid amount, and therefore needs additional funding to pay the costs.†Three Warner-related entities are identified as being among the 20 unsecured creditors with the largest claims against the company, although it also noted that the status of the claims by those three are “disputed.â€
The person briefed on the matter said he did not expect the studio to alter its release plans for the fi! lms.
While no full schedule of assets and liabilities has yet been filed, the court papers said Rhythm and Hues had about $27.5 million in assets at the end of 2012, and about $33.8 million in liabilities. One of the company’s filings identified Rhythm and Hues as one of the “top eight†visual effects companies in the world, and said it had contributed to more than 150 feature films. Those include “Life of Pi,†a Fox film whose visual effects have been nominated for an Oscar.
The Rhythm and Hues bankruptcy compounds financial troubles across the effects industry, which has been affected by intense global competition.
A Warner spokesman declined to comment on the filings.
