PORT ST. LUCIE, Fla. - The digital production company founded by director James Cameron said Tuesday that it filed for Chapter 11 bankruptcy protection and reached a deal to sell its operating business to a private investment firm for $15 million.
Less than a year after going public, Digital Domain Media Group Inc., best known for its work on Cameron's "Titanic" and its hologram of the late rapper Tupac Shakur, filed in the U.S. Bankruptcy Court for the District of Delaware, along with a Canadian court.
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.
The Port St. Lucie, Fla., company's Digital Domain Productions business has studios in California and Canada that create digital visual effects, animation and digital production for the entertainment and advertising industries.
In the company's court filings, Michael Katzenstein, its chief restructuring officer, said that the company was running out of cash 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.
Apart from its work on "Titanic," Digital Domain had produced visual effects for more than 90 movies, including "Pirates of the Caribbean: At World's End" and the "Transformers" series. In April, its Tupac Shakur hologram made a splash when it took the stage at the Coachella Valley Music and Arts Festival and appeared to perform alongside Snoop Dogg.
The appearance also boosted the company's stock. Since going public in November, the company's shares have traded between 44 cents and $9.20, hitting their peak in the weeks after the performance.
The filing comes days after Digital Domain said it was closing its Florida facility, laying off about 280 workers. The company's CEO, and second-largest shareholder, John Textor resigned, protesting the decision.
Digital Domain had spent the past few years building a new animation studio in Port St. Lucie, using millions in incentives from the city and the state. The company went into default on a series of loans.
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.
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.
As of June 30, the company had total assets of about $205 million and total liabilities of about $214 million.