Today.Az » Weird / Interesting » James Cameron`s digital effects company announces bankruptcy
12 September 2012 [18:36] - Today.Az
Less than a year after going public, the digital production company founded by director James Cameron has filed for Chapter 11 bankruptcy protection and agreed to sell the core of its business to a private investment firm for $15 million.
But the company was "running out of cash," Chief Restructuring Officer Michael Katzenstein said in court filings, and had violated cash and debt requirements set forth by its lenders. It tried to find additional outside sources of capital, but wasn`t able get enough to restructure its debt and pay its operating expenses, he said.
The downward spiral was swift. The company went public just 10 months ago, selling nearly 5 million shares at $8.50 each, below the expected $10 to $12 range. Drifting to the $5 range by spring, the stock then spiked as high as $9.20 following huge reaction to the Shakur hologram, with the performance garnering 15 million YouTube hits within 48 hours and winning a top award at the creative marketing gathering Cannes Lions.
Florida Gov. Rick Scott has ordered his inspector general to investigate the process used to award millions in state incentives that were used to lure Digital Domain to the state.
Digital Domain filed in the U.S. Bankruptcy Court for the District of Delaware, along with a Canadian court. Day-to-day operations of Digital Domain`s remaining business won`t be affected by the Chapter 11 filing, the company said. Debt holders have agreed to provide up to $20 million in financing that will fund its activities while it restructures.
The sale agreement with Searchlight Capital Partners LP includes the company`s operating subsidiaries in the U.S. and Canada. It remains subject to an auction process where the company can consider other higher offers, and must be approved by the court.
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