Chapter 11 reorg faltered as models and miniatures biz shifted to other vendors

One of the most storied facilities in the history of movie f/x has closed its doors.

Kerner Optical, the San Rafael, Calif.-based models and miniatures shop that began life as the original Industrial Light & Magic, shuttered after its Chapter 11 bankruptcy reorganization plan failed.

The ILM models and miniatures unit ushered in the modern era of effects-driven tentpoles. It grew from the team assembled for the original “Star Wars” and moved with George Lucas to the Bay Area. But digital effects came to dominate the industry, and by the middle of the last decade there wasn’t enough work for the models and miniatures unit from ILM alone to keep it afloat.

Lucasfilm sold it to model maker Mark Anderson in 2006, freeing it to work with other vfx companies. But CEO Eric Edmeades, who acquired a controlling interest in 2009, said Kerner Optical had lost around a million dollars a year since it was spun off.

Edmeades told employees last week in an email that with the support of ILM, which had remained Kerner Optical’s biggest customer, management had tried to reorganize under Chapter 11 earlier this year.

However, one creditor objected to the reorg plan and leveled allegations of mismanagement. That was enough to force ILM to award a contract to New Deal Studios instead of Kerner for the first time. That sunk the plan.

Kerner’s other companies remain open for business, Edmeades told Variety. Its Kernercam 3D camera rig business will be hurt, as the sfx division was a client, but will continue. Kerner Pictures, the production division that hoped to create a slate of 3D films, is alive but will also be hurt by the closing of the f/x division.

The Kernerworks “skunk works” company, which makes a realistic training dummy for trauma training, will also remain open.

Edmeades also said Kerner’s research and development division continues to undertake work for military and intelligence contractors.

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