Digital Domain Media Group, the parent company of visual effects studio Digital Domain said Tuesday it has defaulted on payment obligations and is in two sets of talks, with a lender, and a strategic partner, to emerge from financial crisis.In an SEC filing, the company said it appointed Michael Katzenstein interim chief operating officer reporting to a new special board committee. Katzenstein is a senior managing director of FTI Consulting. Troubled Digital Domain has been unraveling this summer as it failed to meet certain debt covenants with lenders, and was ultimately given a month to restructure its debt. With no agreement in place by late August, lenders cried default and demanded full repayment of principal and interest of about $55 million. The company said it’s continuing to talk with holders of its senior notes for an extended forbearance arrangement as it explores refinancing all or a portion of its debt. “There can be no assurance that the company will be successful in its attempt to secure extended forbearance agreements,” it said, which means lenders could ultimately opt to foreclose. Meanwhile, Digital Domain is evaluating a term sheet received from an institutional investor proposing a senior secured debt financing transaction as well as a proposal from an unspecified business partner regarding “a significant equity investment.” DDMG stock plummeted early Tuesday, partially recovered, then faltered at the close to finish the day down almost 32%, to $ 1.41. DD, founded by Scott Ross, James Cameron and the late Stan Winston in 1993, has been among the front rank of visual effects companies for nearly 20 years, and led the Oscar winning vfx on “Titanic” and “The Curious Case of Benjamin Button.” It is the only major vfx company that is publicly traded, and its SEC filings show a long history of losses and debt. Under its current leadership it acquired 3D conversion vendor In-Three; opened a branch in Vancouver and established a new campus in Florida, where is receiving subsidies from the state and from the City of Port St. Lucie. It has also linked with Florida State U. to use student labor for visual effects work in exchange for college credit — a move that infuriated some of its workforce and artists around the vfx industry. The company’s strategy includes using its expertise in computer graphics to pursue military training and simulation contracts.