JS Communications has finally settled for a reduced break-up fee in the drawn-out Rhythm & Hues bankruptcy saga. It’s been two months since troubled VFX house R&H sold out of bankruptcy to Prana Studios-led Holdings, LLC following a roller-coaster closed-door auction. At issue was the court-approved $425K fee promised to JS Communications as stalking horse bidder if a qualified rival beat them out for the Life Of Pi company, which JS was eyeing to buy. But in a hotly contested development, JS failed to meet a deadline to submit its bid (exec David Shim told me then that his dealings with Fox and Universal left him less than optimistic about buying R&H without future work assurances). Per a court document filed this week (read it here), JS will receive a $300K break-up fee. If approved in court June 4, that should put the R&H saga to bed for the time being; multiple class action lawsuits against R&H filed by former employees have yet to be settled.
2ND UPDATE, 10:30 PM: The 3D animation and effects studio based in Los Angeles and Mumbai emerged victorious tonight after an auction that stretched across two days. Its past high profile clients include Disney (TRON: Legacy, Planes), Paramount (Transformers: Dark Of The Moon), and The Weinstein Co. (Hoodwinked!), studios not involved in the recent bankruptcy saga of the Oscar-winning Rhythm & Hues. A court hearing is set for 10 AM tomorrow to finalize the sale.
UPDATE, 3:30 PM: The end of the Rhythm & Hues bankruptcy saga just got pushed back a little further. Judge Neil Bason has approved Rhythm & Hues’ request to continue its bankruptcy sale hearing Friday at 10 AM. The auction will resume today at 4 PM. Two bidders are currently battling for the company, but Rhythm & Hues lawyers will allow an unnamed bidder that previously withdrew to submit a new bid, according to statements made today in court. They may also allow Psyops to rejoin the fray bringing the potential number of bidders to four. Meanwhile, the court will decide tomorrow if stalking horse bidder JS Communications will receive its contentious break-up fee.
UPDATED: It’s coming down to the wire for bankrupt VFX house Rhythm & Hues. Today at 5 PM is the deadline Federal Court Judge Neil Bason set for interested buyers to submit qualified bids for the company ahead of a March 27 auction. I’m told at least four bidders will be entering the fray, including Prime Focus, Prana Animation, Psyop, and Rocket Science 3D, and possibly others. Korean company JS Communication this week dropped out as the court-approved stalking horse bidder, which would have guaranteed Rhythm & Hues a minimum bid at auction. That surprise hiccup sprang from recent failed talks between JS and studios Fox and Universal, which last month teamed to bail out Rhythm & Hues with a $17 million DIP loan. JS rep David Shim told Deadline the two studios were uncooperative when he asked for a non-binding handshake agreement to $60 million worth of work per year for three years to ensure Rhythm & Hues had financial lifeblood through a post-sale rebuilding phase. He also says he agreed to pay an additional $3M to cover operational costs for the company. But a source with knowledge of the talks claims Shim was asking for a binding guarantee as well as additional financial commitments, a tall order in an industry where production and release schedules for studio films are always potentially in flux.