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Rhythm & Hues gets $17 mil loan from Universal, Fox

Bankrupt vfx firm faces class-action suit from ex-employees

A bankruptcy judge has greenlit a plan for Universal and 20th Century Fox to provide up to $17.1 million in loan financing to allow vfx firm Rhythm & Hues to continue operating following its Chapter 11 filing last week.

Meanwhile, two R&H employees filed class-action suits against the company on Friday, claiming that its decision to fire hundreds of workers just before filing for bankruptcy protection violated labor laws requiring 60 days’ advance notice of terminations. The company filed for Chapter 11 protection on Wednesday. Employees were informed of the layoffs on Feb. 10 and 11, according to the suits.

The loan, approved by U.S. Bankruptcy Judge Neil W. Bason, included a $6 million influx on Friday and $5 million to be advanced today. Bason has scheduled a hearing on the debtor-in-financing for March 12, when he will decide whether to approve extra installments of $4 million on March 18 and $1.6 million on April 8.

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The class action suits cite violations of the 1988 Worker Adjustment and Retraining Notification Act, which requires larger companies to give employees at least 60 days’ advance notice of plant closings or mass layoffs.

Anthony Barcelo, a compositing technical director at the firm, filed suit in U.S. Bankruptcy Court in Los Angeles on Friday on behalf of himself and other employees who were laid off. He claims 254 employees were pink-slipped from the El Segundo facility on or within 30 days of Feb. 11. His suit seeks to recover 60 days’ wages and benefits under the WARN Act.

“I felt compelled to be the one (to put his name on the class action suit),” Barcelo told Variety. Barcelo says he was left nearly penniless when R&H delayed his final paychecks. “It’s the artists who are getting screwed here, not the moviegoers, not the companies, not the studios,” said Barcelo, who has taken a new vfx job in Vancouver.

Thomas Capizzi, a computer modeler who had been with the company for 16 years, filed a similar class-action suit against R&H later on Friday. One of his attorneys, Jack Reeder, noted that there was no mention in any papers filed by Rhythm & Hues in its bankruptcy case of any layoffs outside the U.S. Both cases also cite violations of California’s version of the WARN Act.

Barcelo’s attorney, Jack Raisner of Outten & Golden, also is representing a Digital Domain Media Group employee who claims DDMG violated the WARN Act when it laid off employees and closed its Florida facility last year.

That class-action suit was filed in September in the Delaware bankruptcy court where the rump DDMG’s case was being handled.

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