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WPEC-TV CBS12 News :: News - Treasure Coast News - UPDATED: Digital Domain declares bankruptcy

UPDATED: Digital Domain declares bankruptcy

(Reuters / CBS12) - Digital Domain Media Group Inc, which won Academy Awards for visual effects in films including "Titanic," filed for Chapter 11 bankruptcy protection on Tuesday, days after it warned that it may need more cash to stay afloat.

The company is planning to sell its operation and assets to Searchlight Capital Partners for $15 million, which will continue operations.  The sale will be subject to a public auction to see if there are higher bidders. Any auction and sale must be approved with the Court.

The company, whose founders include "Titanic" director James Cameron, listed total debts of $214.9 million and total assets of $205.0 million, court documents showed.

The company laid off more than 200 workers and shut down its Port St. Lucie studio on Friday after defaulting on the terms of several loans earlier last week.

Digital Domain has worked on more than 90 major motion pictures, including "Pirates of the Caribbean: At World's End," "Transformers," "The Curious Case of Benjamin Button," "Star Trek" and "X-Men: First Class".

The company, which specializes in creating realistic computer-generated human characters, said in June it planned to produce virtual Elvis Presley likenesses across various platforms, including live shows, TV and online.

Digital Domain, which raised $42 million in an initial public offering in November, said last month it was looking at strategic alternatives and had hired Wells Fargo Securities LLC as financial adviser.

The company said it was in breach of conditions on some borrowing.

"As a result of negative working capital, the company failed to meet the liquidity covenants and was running out of cash," Chief Restructuring Officer Michael Katzenstein said in court documents.

The company continues to operate studios in California and Vancouver and a training school in West Palm Beach.

Chairman and Chief Executive John Textor, who is also the company's biggest shareholder, resigned last week, saying he was in "profound disagreement" with the decision to close the Florida studio.

As of Aug. 28, Textor controlled about a quarter of Digital Domain, according to Thomson Reuters data.

Florida Gov. Rick Scott has ordered a probe into the state's decision to award millions of dollars in economic incentives to the company to help bring it to Port St. Lucie, the Associated Press reported on Monday.

The company listed Reliance Mediaworks Ltd, Legendary Pictures and Bell Technologies Inc as among its largest unsecured creditors.

Digital Domain shares closed at 55.4 cents on Monday, giving it a market value of $24 million, down from about $400 million on May 1 when the stock traded as high as $9.16.

The Case is In re: Digital Domain Media Group Inc, Case No. 12-12568, U.S. Bankruptcy Court, District of Delaware.UPDATED: Digital Domain declares bankruptcy

Tuesday, September 11 2012, 09:58 AM EDT

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