Lawyers examining the collapse of Oscar-winning special effects studio Rhythm & Hues Inc. are blaming its former leaders for focusing on "notoriously low-margin projects" and spending the California firm's money on a startup investment that had nothing to do with winning business from Hollywood, Dow Jones Daily Bankruptcy Review reported today. In a lawsuit, lawyers who are trying to repay Rhythm & Hues' old debts said that former leaders made decisions that cost the firm $70 million before it filed for bankruptcy in 2013. Those leaders continued to focus on winning special effects and computer generation bids from only three film studios — Warner Brothers, Twentieth Century Fox and Universal Studios — even though that work was tough to profit from, said the lawsuit filed in U.S. Bankruptcy Court in Los Angeles.
