Hoped-For Purchase by Prime Focus Apparently Fell Through

Animation studio Rhythm & Hues, which is widely expected to win an Oscar this year for Life of Pi, is reportedly filing today for Chapter 11 bankruptcy protection. The El Segundo, CA-based company is said to have warned workers that their paychecks will be delayed "indefinitely."

Unlike Digital Domain, Rhythm & Hues is not a public company, meaning its financial situation under bankruptcy will not be as much of an open book as that of Digital Domain, which entered Chapter 11 last year.

StudioDaily profiled VFX supervisor Bill Westenhofer's work on Life of Pi earlier this month.

The news was jarring to the VFX industry, but not unexpected. R&H was already thought to be financially strapped — partly because Universal pulled some work on Snow White and the Huntsman from the company — with three Hollywood studios reportedly ponying up some $20 million to keep the studio up and running as it negotiated a sale to Prime Focus in Mumbai.

WIth the Prime Focus deal apparently falling through, it's not immediately clear what happens to the VFX projects the company was currently working on — Seventh Son, 300: Battle of Artemisia (both Warner Bros.), Percy Jackson and the Sea of Monsters (Fox), R.I.P.D. (Universal), and The Hunger Games: Catching Fire (Lionsgate) are numbered among them, according to various reports.

If bankruptcy proceedings result in Rhythm & Hues ceasing to exist as a VFX entity, expect even more renewed calls for VFX workers to unionize, perhaps internationally, in order to gain negotiating leverage against Hollywood studios in their notoriously low-margin business, not to mention the role of tax subsidies in studiuo decision-making. VFX Soldier has a good summary of the issues in play, written before the R&H bankruptcy news broke.