When Rhythm & Hues declared bankruptcy in February 2013, laying off hundreds of employees and taking $17 million in loans just so it could complete VFX work for Universal and Fox, the court filings led to weeks of discussion about how a company that had worked on such films as The Hunger Games and The Lord of the Rings and won an Oscar for Life of Pi had gotten into such dire straits. Low margins, the use of digital moviemaking and cheap labor in foreign countries were all factored in to the downfall of Rhythm & Hues, which sold itself for $17.8 million at auction as creditors continued to circle the bankrupt estate.
On Friday, two years after Rhythm & Hues filed for Chapter 11 bankruptcy, the Trustee in the case brought a new complaint against the company’s former officers and directors, including John Patrick Hughes, Pauline Ts’o and Keith Goldfarb. The suit presents a different take on what led R&H to go bust.
“While claiming to promote a caring and artistic corporate culture that enhanced R&H’s value, Hughes, Ts’o and Goldfarb breached their duties of loyalty, due care, and good faith by directing R&H to engage in risky transactions with entities they or their family members owned or controlled,” states the complaint.
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