POSTED: Wednesday, September 12, 2012 - 1:00am
UPDATED: Wednesday, September 12, 2012 - 1:04am
NEW YORK (CNNMoney) — Digital Domain Media Group made headlines this year when it created a hologram for the late Tupac Shakur that "performed" at a music festival. But that buzz wasn't enough to save the special effects company, which filed for bankruptcy protection on Tuesday.
Digital Domain, which went public in November, said in a press release that it filed for Chapter 11 bankruptcy protection from its creditors. Shares were halted Tuesday but last traded at 55 cents, down 94% from a peak of $9.20 in May. The filing wasn't a shock, as the company had already warned of problems with overhead and long-term debt.
Private investment firm Searchlight Capital Partners will buy Digital Domain's core production business for $15 million, pending court approval.
It's an abrupt end for the nearly 20-year-old company, whose founders include director James Cameron. Before its IPO and Tupac tricks, Digital Domain worked on special effects for scores of big movies including "Pirates of the Caribbean," "Transformers" and Cameron's "Titanic." The company won an Oscar for its work on reverse-aging Brad Pitt's character in "The Curious Case of Benjamin Button."
But Digital Domain's financials have long been a concern. Since the company was typically hired by Hollywood studios on a contract basis, its revenue stream was pretty small. Digital Domain expressed hope recently that expanding the virtual performer business beyond Tupac would be lucrative, as it would be able to get a cut of the ticket sales for such events.
Digital Domain wasn't able to get out of the hole quickly enough though. As of June 30, the company had assets of $205 million and debts of $214 million. In August, it had hired Wells Fargo to advise on "strategic alternatives" for the business.
Last week, Digital Domain officially announced a major restructuring that included the resignation of CEO John Textor. The company also shuttered its Port St. Lucie, Fl., operations and fired most of the 320 employees based in that office.
The company had also planned to make its own movies based on its animation and effects. As part of that plan, Digital Domain partnered with studio giant Lionsgate to make a film based on the popular sci-fi/fantasy novel "Ender's Game."
That movie is set to be released in November 2013. Lionsgate did not immediately respond to a request for comment on whether it will now be delayed.