Sept. 21 (Bloomberg) -- Digital Domain Media Group Inc., the special-effects company that collected millions of dollars in cash and land from taxpayers before filing bankruptcy, should be barred from selling any public property, the Florida city where the company is based said in a court filing.
Officials from Port St. Lucie are concerned that an auction of the company’s assets that began today may include computers and other property that are actually owned by the city through a lease agreement. Beginning in 2010, the town sold $40 million of revenue bonds to help build a 150,000-square-foot digital animation studio, gave the company $10 million and provided 15.5 acres of land on which the studio was built.
The last cash payment to the company came in February. A few months later the company fired 250 people who worked at the studio and filed bankruptcy.
“Port St. Lucie finds it difficult to believe that the debtors’ prior management was unaware of its financial condition when it accepted the February incentive payment,” the city said in court papers filed today in U.S. Bankruptcy Court in Wilmington, Delaware.
Digital Domain has operations in Florida, California, Canada, India, China and Abu Dhabi. The company filed for bankruptcy last week with plans to hold an auction for most of its assets, including an investment in “Ender’s Game,” the science-fiction movie starring Harrison Ford that is scheduled to be released next year.
The company also received funding commitments from the state of Florida and a land grant from the city of West Palm Beach. Both the state and West Palm Beach also filed papers asking the bankruptcy court to ensure that no public property be sold at the auction.
Julie Miller, a spokeswoman for the company, declined to comment.
Digital Domain blamed its bankruptcy on a cash crisis that hit less than a year after the company went public.
The company, which counted former Miami Dolphins football star Dan Marino among its investors, had assets of $205 million and debt of $214 million as of June, according to Chapter 11 papers.
The case is In re Digital Domain Media Group Inc., 12-12568, U.S. Bankruptcy Court, District of Delaware (Wilmington).
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