Hollywood studios will not be pulling the plug on projects at the financially troubled special-effects company after Digital Domain got some breathing room yesterday in bankruptcy court. Judge Brenden Shannon approved a fast-tracked auction of Digital Domain Media Group for September 21 and a debtor-in-possession order (read it here) that gives the almost-broke company immediate access to almost $12 million. The new auction date comes after newly named DDMG chief Ed Ulbrich told the court that six Hollywood studios told him they would start pulling projects from the Oscar-winning company this week unless Digital Domain had a clear financial path forward. The loss of those effects projects would result in the removal of what is currently 80% of the company’s revenues. “We’ve been fighting diligently to fend off a run on the company, Ulbrich testified. DDGM’s lawyer Robert Feinstein put it even more bluntly: “The studios are freaking out,” the attorney told the judge. Some of the films that Digital Domain is currently working on include Lionsgate’s Ender’s Game (Digital Domain is a co-producer), New Line’s Jack The Giant Killer, and Paramount’s G.I. Joe: Retaliation.
The path is not completely clear for Digital Domain. The judge has set a September 20 hearing to hear from other interested parties in the case and potentially reconsider his decision on the expedited auction. Private -quity firm Searchlight Capitol has said it will bid $15 million for the Digital Domain Productions division of the company. Hudson Bay Master Fund and other senior DDGM creditors liked the Searchlight offer so much they put up the DIP money to make sure the company was able to keep the lights and rendering machines on until the auction.
Digital Domain has made special effects and computer-generated characters for almost 100 Hollywood films including Titanic, for which it won an Academy Award; and Disney’s Pirates Of The Caribbean: At World’s End. The company also created the hologram of deceased hip-hop star Tupac Shukar that caused a sensation when he appeared on stage at this year’s Coachella music festival. Digital Domain had recently announced it was going to create Elvis Presley holograms for use in films and on TV.