Just five months after a holographic image of the late Tupac Shakur shook up the world by appearing onstage at the Coachella Music Festival, Digital Domain Media Group, the company responsible for the high-tech cameo, filed for Chapter 11 bankruptcy protection Tuesday and has reached an agreement to sell its visual effects unit for $15 million.
The filing is part of an effort to “ensure the long-term future of its core business” and spark a “sale of assets” after the company found itself millions in debt on the heels of significant losses in recent years. As of June 30, DDMG claimed assets of $205 million and liabilities of $214 million, according to the L.A. Times, and just last week defaulted on a $35 million loan to a group of investors.
Despite the ominous mystique of a bankruptcy filing, though, the move is not necessarily a death knell for the company.
The capital raised from the sale of the visual effects unit, Digital Domain Productions Inc., to Searchlight Capital Partners will allow them “to continue to bring our expertise to feature films, advertising, games and other media experiences, with a focus on what we do best: creating amazing digital productions,” DDP’s chief executive Ed Ulbrich told the Times.
“We believe in the visual effects business of Digital Domain, led by Ed Ulbrich and his team, and are strongly committed to maintaining the premier product they create for customers and moviegoers,” said Searchlight co-founder Eric Zinterhofer. “We have committed and will continue to commit our strong financial resources and expertise to ensure that this business always remains healthy and vibrant.”
Digital Domain’s senior debtors have also agreed to provide the company with $20 million to cover operating expenses including employee pay, but that move is pending approval from the courts.
The company also says that its daily operations will not be effected by the bankruptcy filing.
The climb back to profitability will likely be a long one, though, as Digital Domain’s stock has plunged since the company went public back in November. Opening at $8.50 a share during the initial November sale, as of Monday it was listed at a paltry 55 cents.
The New York Stock Exchange said it has begun the process of delisting the company’s common stock and has suspended trading due to uncertainty over the outcome of the bankruptcy process.
What, if any, effect these developments will have on proposed musical ventures like a Tupac Hologram tour are yet to be seen.