DD rushing toward sale before majors pull their fx work

Marvel’s head of visual effects challenged Hollywood on Thursday to step up and support struggling vfx studio Digital Domain as it attempts to emerge from bankruptcy.

Victoria Alonso, who also serves as executive producer on Marvel movies, told Variety, “Our faith is with the artists and the creative people that have brought Academy Award-winning imagery. That’s who we’re fighting for. That’s the reason we’re there, and that’s why we want to see them get to the other side of the road. And in my opinion, every single studio and every competitor in the visual effects field should want that.”

Digital Domain will need the support of the majors if it’s to survive. Studios are making inquiries with other vfx houses to move work if DD’s future is not settled soon. Among the pics on DD’s visual effects slate were “Ender’s Game,” “Maleficent,” “47 Ronin,” “Oblivion,” and “Iron Man 3″; if Digital Domain does lose its movie work, it could spell doom for the facility.

DD’s people “need to have a second chance, and as a community we should fight for that, said Alonso, who started her career at Digital Domain. Alonso argued that it would be bad for competition in the vfx space if DD closes.

Events continued to move quickly Thursday as DD rushes toward a sale out of bankruptcy in hopes of shoring itself up before the majors pull their work.

Late Thursday, Digital Domain Media Groupannounced that it had reached agreement with its senior noteholders to provide approximately $11.8 million of debtor-in-possession (DIP) financing.”Combined with our cash from ongoing operations, this funding supports DDMG in paying normal operating expenses, such as employee wages and benefits, payments to vendors and suppliers, and other obligations,” said Michael Katzenstein, DDMG chief restructuring officer.

Marvel threatened before the bankruptcy court to pull its work from DD if a sale is not arranged quickly. That infuriated some Digital Domain staff at first, but management reassured them that Marvel had actually done them a favor because Marvel’s threat prompted the court to approve an accelerated schedule for the sale.

Marvel ended up pulling work from DD anyway, but not because of the bankruptcy. Robert Downey Jr.’s ankle injury forced the pic to use more digital doubles than originally planned, so some vfx were shifted to Weta Digital. “Iron Man 3″ will resume shooting Oct. 1.

Visual Effects Society chairman Jeff Okun said DD’s troubles reflected a change in how studios deal with vfx facilities. On “Master and Commander,” he noted, when Asylum VFX got in trouble, “the studio came in and four-walled the place and worked out how the company was going to pay them back later.”

Okun, who said he has never been through such a crisis himself but has spoken to others who have, said “Today, when a company starts to go south, the studios can’t afford to be left holding the bag. The studio can’t say, ‘We’ll pay you guys’ if they’re shaky. When a studio loses faith in a facility, they can cause the facility to crash and burn. If (the studios) want DD to survive, they’ll continue to award them work and pay them money,” Okun said.

The sale of Digital Domain Prods. is skedded for a one-day process to be held on Sept. 21. DD insiders believe eight to 10 companies will bid. Published reports say Prime Focus is interested; the CEO of 3D conversion shop Rocket Science 3D told Variety that his company wants to bid. But the accelerated schedule will make it difficult for any company to do proper due diligence.

In Port St. Lucie, Fla., community leaders were grappling with the closure of the Digital Domain facility and its impact on the economy. The Palm Beach Post quoted St. Lucie County officials as saying the layoffs were the largest in recent history in the area, and to make matters worse, DD staffers did not receive their final paycheck. (Late Thursday, DD management said they had notified laid-off staffers that tomorrow they will receive the paychecks that were due last Friday.) Local officials are treating the closing like a natural disaster.

The Treasure Coast Food Bank directed ex-employees to a hotline where they could get information on obtaining housing, groceries and meals, while another nonprofit scheduled an event to help employees with a job search. There was also a question as to whether the Mets spring training facility, named Digital Domain Park in 2010, would continue with that moniker.

One Digital Domain employee, Minh-Tam Frye, filed suit in U.S. Bankruptcy Court in Delaware, claiming that employees were not provided 60 days’ advance written notice of their terminations, as required by the Worker Adjustment and Retraining Notification Act. Frye is seeking to represent a class of laid off employees and to recover 60 days’ wages and benefits.

Other showbiz companies have stepped in to try to sign some of DD’s laid off. Blue Sky Studios, which makes the “Ice Age” pics for Fox, has already sent reps to the area; 3D conversion company Legend3D put out the word that it’s hiring up to 200 people and invited former DD Florida staffers to apply. Legend3D topper Barry Sandrew told Variety his company hasn’t sent anyone to recruit in Florida yet but will. In the meantime, he said, he believes they have received “quite a few” applications from laid-off DD artists.

(Ted Johnson and Karen Idelson contributed to this report.)

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