DDMG Files For Bankruptcy

DDMG files for bankruptcy. LA, Vancouver, and SF have been sold and will continue operations:

After several weeks of high drama, troubled Digital Domain Media filed for Chapter 11 in the U.S. and Canada and agreed to sell its production business to Searchlight Partners Capital for $15 million.

Employees at Digital Domain’s Venice, Calif. HQ and its branches in Vancouver, Canada and the San Francisco Bay Area will retain current salary and benefits.

A blessing in disguise?

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30 Responses to DDMG Files For Bankruptcy

  1. toodlepop says:

    I think this is good news. Going public was really a bad idea. Good riddance – John Textor.

  2. N says:

    I’m curious about how much of this was due to a run on their stock.

    Obviously he was overextending the company, but the drop in value of the stock was similar to the kind of stuff you see happen with mining industry penny stocks. Usually some shady trading going on in a boiler room in Delaware.

    • ion says:

      http://www.zerohedge.com/news/firm-brought-you-holo-tupac-dies-less-year-after-ipoing-taking-millions-taxpayer-subsidies-it

      Proving that the complete lifecycle of US corporations is now absolutely corrupt, not just the “birthing” segment, but the terminal one as well, is the attempt by private equity firm Searchlight Capital Partners to steal the only asset worth any money, in a carbon copy replica of what Barclays did with the Lehman Brother North America brokerage, which it stole for pennies on the dollar in the post bankruptcy scramble to find any buyer. As Reuters reports: “On Tuesday, Digital Domain said it had agreed to sell its production business — the bulk of the company — for $15 million to private equity fund Searchlight Capital Partners. A one-day auction is planned on September 21 to solicit competing bids, as required by the bankruptcy code…. Digital Domain said it needed to finalize the sale quickly, through the one-day auction, or Hollywood studios would cancel work from the firm. However, a bankruptcy attorney said a 10-day sale schedule was “incredibly short” and may make it difficult to find bidders as well as leave creditors little time to review the process. “The question here is whether the need for the sale to occur within 10 days is a legal emergency, created for the benefit of the purchaser,” said Kenneth Rosen of Lowenstein Sandler.”

      • ion says:

        And ……

        http://www.palmbeachpost.com/news/news/digital-domain-tried-to-sell-prime-west-palm-beach/nR99Z/

        Remember, this is a listed company. Textor could not make decisions on his own, they had to be jointly made at the board, including the people in control now, who were there all along. Looks like they were trying to sell the properties even after they had decided not to pay workers the satutory pay they owed. Think about that if you ever planned on working there … maybe the vfx business doesn’t need firms like that anyway, in Venice, Vancouver or Florida. Good riddance to bad garbage, perhaps.

  3. Clicking Bandit says:

    I wonder if this will sour any future state investments/free tax money deals given to VFX and animation studios…?

    Or how much further towards the bottom can we go?

  4. Dave Rand says:

    On September 11, 2012, Outten & Golden filed suit against Digital Domain Media Group, Inc., et al., seeking to recover 60 days wages and benefits for former employees under the Worker Adjustment and Retraining Notification (“WARN”)

    Act.http://www.warnlawyers.com/CM/RecentCases/DigitalDomainMediaGroup,Inc.asp

  5. dave d says:

    Hilarious… Glad I dont have one bean invested in vfx vendors

  6. ion says:

    if you know any former dd employees who are unaware of this, please direct them to vfx soldier to read. DD 100% broke state and federal employment laws by not providing 60 days notice of a facility closure. But you need to petition your interest.

    The sale has not been made yet. There is still the administration and open bid process at Delaware court to come. The hope is probably to sell off the operations cheap and quiet, then wrap it up in red tape, so as to cut dry any outstanding wages and employee obligations. Plenty of management and lawyers have made, and will make, alot of money out of this closure and fire sale – outstanding employee wages and obligations are supposed to be the number one obligation before creditors for both chapter 7 and 11 bancruptcies. Don’t let financiers and slick directors screw over honest workers yet again!

  7. John says:

    The “new” CEO has been with the company for 20 years, part
    of the exec team with 3 ILM guys – Cliff Plumer, Libreri and Mark Miller – since 2006. Those 4 were in charge of DD.
    All the decisions were made or approved by them.
    Textor has nothing to be proud of, but those four are equally
    responsible for all the actions…

  8. Digital Domain Institute Student says:

    Well got the phone call today… due to the Bankruptcy all Digital Domain Institute classes have been suspended…

  9. dave d says:

    As I mentioned in a prior posts.Vfx vendors produce nothing of any tangible value. 400million to 15 million in a heart beat. This is why it is pointless investing in vfx vendors

  10. Paul says:

    And yet movies can stay around and even hold significant financial value for decades! How much is your car, your fridge or your iPhone be worth in 10 years?

    • dave d says:

      And that why the purely service based aspect of being a vfx vendor as a business model is dead in the water.

      • Thad Beier says:

        You say that, but every company that has attempted to transition from service-based to ownership has failed. Station X (Dungeons and Dragons), Cafe FX (Pan’s Labyrinth), Boss Films (Solar Crisis) … I don’t think one can make that transition. Perhaps you can start a company that way — but the skills to run a service company are diametrically opposed to those skills necessary to partner on a picture.

      • crosendahl says:

        Thad, not true. PDI, Pixar, Blue Sky were all service based in the beginning. It is possible – but it does demand that you’re building the company with that long term vision.

      • jonavark says:

        Ha.. funny you should mention Solar Crisis. Just funny. I regret to say that I have credit on that masterpiece. Well.. at least I got to meet Heston.

        But. .it wasn’t Boss’s foray into creating content. It was a fluke. That’s not what killed Boss.

      • Paul says:

        @crosendahl, PDI was contracted by Dreamworks SKG to produce Antz and Shrek. After the wild success of the latter, Dreamworks bought PDI outright. Similarly, I believe Blue Sky was already owned by Fox when they moved away from VFX for other studios to focus on animated features.

        Of the three examples then, only Pixar was successful at producing feature animated films. Even there they did it under the relative security of a 5 picture contract with Disney, which may have involved co-financing of the films.

  11. Dave Rand says:

    If you work in the visual fx industry, you’re invested in that industry. This loss is a loss for everyone who sits behind a vendor’s workstation. A door that was once open, has closed on us all. It will be a while before the next vendor is able to use public markets to raise capital and move towards creating their own content, the best capital to be had. In the mean time.. for the vendors… it’s back to “Forty five, do I hear fifty…fifty…fifty….going once going twice GONE !

  12. Rob Blauser says:

    Honestly, why is anyone still working in that field? Where is the incentive?

  13. Thad Beier says:

    I dunno…PDI did not succeed in creating content until they were bought by Dreamworks. Blue Sky was owned by Fox. It is very different if you are owned by a studio, you aren’t trying to extract money from the studio accountants.

    Pixar — yes; that is the best counterexample.

    And R&H as well — I didn’t know that they had a percentage in Yogi and Hop — although according to others here, they have yet to see a profit from those. And that’s the real issue, it is very difficult to participate in the success of a movie, the studios are really good at making that hard.

    • crosendahl says:

      If you want to play at the table, you need to ante up. To do this you need capital. Pixar isn’t a counter example in that respect; they sold a majority of the company to Jobs in order to fund their dreams (Steve bought it from Lucas, but same net effect). That capital (and Steve’s negotiating prowess and shared vision) allowed them to do a deal with Disney for backend participation on Toy Story in exchange for funding half the production costs.

      We had the same challenge with PDI, the business itself wasn’t profitable enough to build up a $20-40M war chest so we had to bring in an outside investor to get to the next step. That outside investor happened to be the studio we were working with, which made us ideally aligned. DW was a minority equity owner in PDI until I left. Having an outside investor, ideally a studio, was a part of the strategy that we knew we’d eventually have to do to get where we wanted to go.

      I don’t know anything about R&H’s deals, but unless you’re actually putting up cash for real top line ownership on a project you’re unlikely to every see any backend.

      Regarding DD, the Ender’s Game deal *might* have worked. Tembo *might* have worked – both of those were reasonable strategies of expanding into the content business for DD, and using the proceeds from an IPO would have been a legitimate way to do that. But they didn’t have the cash to pursue both of those at the same time, let alone all the other business directions that Textor thought they could do.

      So yes, I agree with you – it is incredibly hard to participate in the success of a movie. You have to be able to afford to buy your way into the deal, and you’ll never be able to do that on the narrow margins the industry allows.

      • Paul says:

        Holy Mackerel Batman,
        I didn’t put two and two together until now to realize that crosendahl is Carl Rosendahl, one of the founders, or OG’s as the kidz would say, of Pacific Data Images.

        Of anyone on this board, he’d know the history of these companies, having lived it.

    • Dave Rand says:

      I had posted more details on the post from today but I’m reposing here. I’d love to comment on R&H but I’m here and cannot. Great company though I can say that, a true survivor.

      I think we can agree that although creating and owning content may have major hurdles …..it’s a far better plan than the one that’s been on place (bidding without a solid blueprint and not owning any of the content) it’s eating vendors like a cancer.

      Then there’s this one…

      SKYLINE

      Worldwide: $66,821,036
      Production Budget: $10 million

      Skyline: Rotten Tomatoes score 16 (rotten)
      Jeff Hueser of FxGuide did a great podcast on this one here

      http://www.fxguide.com/fxpodcasts/Skyline/

      Maybe there’s a clue here. Now I’m not sure of the Strauss Bros actual take of all this but I can’t see where they lost. Shooting it in their own apartment, using very creative devices on set like 110 outlets and simple spot lights and other make shift equipment, they fed it to their own small vfx crew and made it look like a whole lot more than anything approaching this budget.

      It was the VFX that sold seats in the theatre.

      I’ve worked on several shows for an A list director doing this now. A true genius in production. Writers in one room, vfx in another, editors in their own suites, sound in theirs, all feeding off one network and sending the content to a state of the art mixing room. Imagine planing from the writing stage of a show as a cg supervisor about the visual effects to be had. No subsidies. The director sits up stairs and is the final say in all things creative. One voice, always available for consult immediately. The topper …it’s all the best talent in their respective fields, highly paid and all union (except for VFX). I’m not sure if he wants his name on VFX soldier because quite frankly I don’t trust many of the anonymous ghosts that haunt these pages. If you contact me directly I’d gladly discuss it with you once I know who you are. I’d love it if Jeff would do a interview. I think they may be open to something like that.

      There’s no bidding, bidding is bullshit and killing us. One smoke screen after another is put in our faces so we don’t wake up to the true culprit. The greatest movie making trick of all time and we keep falling for it. Anyone in the real business world should be laughing their asses off at us. The rest of production abandoned this shell game ages ago.

      Once you’ve worked this way no other way makes sense at all. It’s why I write about it from every angle I know how.

      I’m no film making expert but this has simply been my experience.
      Reply

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