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Now browsing: Hometown News > News > St. Lucie County

Digital Domain files bankruptcy; city secures assets
Rating: 2.39 / 5 (59 votes)  
Posted: 2012 Sep 21 - 01:15

By Dawn Krebs

dkrebs@hometownnewsol.com

ST. LUCIE COUNTY - Digital Domain Media Group has gone from building dreams to bankruptcy in less than a week.

On Sept. 7, the special effects and animation studio that opened its doors about a year ago to city and community raves announced a "strategic realignment" that led to the lay off of 280 of its 300 employees who were recently hired.

The company went on to state the move was to "reduce its overhead and restructure long-term debt," and on Sept. 11 filed Chapter 11 bankruptcy in courts in Delaware and Canada.

A Chapter 11 bankruptcy will allow the company to continue to operate, while working out a way to pay back the organization to which they owe money.

Searchlight Capital, a private equity firm, has offered $15 million for the company. The judge suggested an Oct. 2 date for auction. An auction is scheduled for Sept. 21, but might be pushed back a week.

Port St. Lucie city officials, however, were quickly forming a way to recoup the approximate $7.7 million in grants the business received for moving here.

On Sept. 10, the city's attorney office notified Ed Lunsford, senior vice president of Digital Domain, by certified letter to officially inform them they violated their grant agreement.

"As a result of failing to continuously operate the facility, the city will pursue repayment of all awards distributed to Digital Domain," the letter read in part.

It went on to state closing the building and firing the employees resulted in a material breach of the terms of the lease contract that was signed in 2010.

The city also stated the equipment in the building, valued at about $7 million, is the property of the city and cannot be removed from the premises, and that any attempt to will be seen as theft.

The city's finance department traveled to the company on Sept. 11 to begin the process of taking pictures, video and a physical inventory of the city-owned equipment.

"I am concerned there will be an attempt to remove this property," Roger Orr, city attorney, said in a detailed memo to Gregory Oravec, city manager.

"As a precaution, the police department is monitoring the building."

The city will also look into quickly turning over the building, which it owns and is valued at close to $40 million, and renting it to another company.

"We have started to receive many phone calls about other companies wanting to use the building," Mr. Oravec said at the Sept. 9 city council meeting.

On a state level, Gov. Rick Scott's office has requested the state's inspector general to look into the process of how Digital Domain was awarded $20 million in state incentives to come to Florida. The deal the company struck with the state took place before Gov. Scott took office.




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