 transaction that was risky for the company but had millions of dollars of upside to them personally.

The downfall of Rhythm & Hues, and 20 other VFX houses, was covered in a documentary titled Life After Pi released last year.

In that film, which talked about the troubled business model of today's VFX firm, Hughes says, "We run this company for the people. To have hurt them so badly, it's really the antithesis what we wanted to do."

The newest lawsuit filed in bankruptcy court doesn't mention Life After Pi, but does seem to be aware of the way that Hughes has framed his story. "Ironically, while proselytizing about R&H’s special corporate culture and their concern for its labor force, Hughes, Ts’o and Goldfarb pillaged R&H with little concern about the consequences," says the complaint.

Besides questioning transactions that were made in alleged breach of the officers' fiduciary duties, the lawsuit also objects to how R&H, which once had 700 employees at its El Segundo headquarters and nearly $100 million in annual production revenue, was "grossly mismanaged."

About 97 percent of R&H's business came from just three studios — Universal, Fox and Warner Bros — and the directors and officers of R&H are said to have eschewed pursuing a more diversified customer base and accepted "harmful contract terms dictated to them by this handful of Studios." What's more, R&H focused on VFX and CG animation for feature films, "which are notoriously low-margin projects," 3 to 5 percent according the complaint.

"Because of this, if the project was substantially changed, delayed, or cancelled, the razor-thin profit margins would be eliminated, and the project would result in a loss to R&H," continues the complaint. "Even after R&H was hurt by numerous project changes, delays, or cancellations, the D&Os continued to carelessly pursue this business strategy, rather than delving into more commercially profitable business sectors, such as video games, television programs, commercials, and cinematics for special venues and theme parks."

The complaint — which also names other R&H board members as co-defendants including Lee Berger, Prashant Buyyala, Raymond Feeney and David Weinberg — suggests that R&H might have had better success if it focused more on negotiating for equity in films or co-
transaction that was risky for the company but had millions of dollar of top to them personally. 

 The downfall of Rhythm & Hues, and 20 other VFX house, was cover in a documentary titled Life After Pi exhaust last year. 

 In that movie, which speak about the troubled clientele model of today's VFX firm, Hughes says, " We tend this company for the people. To have hurt them so badly, it's truly the antithesis what we wanted to do. " 

 The newest lawsuit charge in bankruptcy court doesn't mention Life After Pi, but does seem to be aware of the manner that Hughes has framed his story. " Ironically, while proselytizing about R&H ’s special corporate acculturation and their concern for its labor force, Hughes, Ts’o and Goldfarb pillaged R&H with little concern about the consequences, " says the complaint. 

 Besides questioning transactions that were made in alleged breach of the officers' fiduciary duties, the lawsuit also objects to how R&H, which once have 700 employees at its El Segundo headquarters and nearly $ 100 million in annual production gross, was " grossly mismanaged. " 

 About 97 percent of R&H's clientele came from just three studios — Universal, Fox and Warner Bros — and the directors and policeman of R&H are said to have eschewed pursuing a more diversified customer base and accepted " harmful contract terms dictate to them by this handful of Studios. " What's more, R&H focused on VFX and CG animation for feature films, " which are notoriously humble - gross profit projects, " 3 to 5 percent according the complaint. 

 " Because of this, if the project was well changed, delayed, or cancelled, the razor - thin profit margins would be eliminated, and the project would result in a passing to R&H, " continues the charge. " Even after R&H was hurt by numerous project change, delays, or cancellation, the D&Os continued to incautiously pursue this clientele strategy, rather than dig into more commercially profitable business sectors, such as video games, television programs, commercials, and cinematics for special venues and theme parks. " 

 The complaint — which besides names other R&H display panel members as co - defendants including Lee Berger, Prashant Buyyala, Raymond Feeney and David Weinberg — suggests that R&H might have had better achiever if it focused more on negotiating for equity in films or co-
 trwnsaction that was risky for the compani vut hav millikns of dullars of upside to them perdobally.

Uke downfall of Rhytho & Hues, ajd 20 othee VFE houses, was covxded in a docujcntarv vitled Life Aftgr Pi releasad last year.

In tfac film, which talked about the troublqd busimeds model of toqay's DFX rprn, Hughes says, "We run this comlany fog the people. To hsve hurt them so badly, it's reaply the antithesis what we wabted ro do."

The newdst lawsuiu yiled in bahkruptcy court doesn't mention Lkfe Ayter Pi, but dies veem to be eware jf the way tmst Hugves has framed his stpry. "Irinically, while proselbtizing about R&H’s spgcial corpmrcte culture and their cincert fos itr lacor fprde, Hugjes, Ts’o and Gkldfarb piloaged R&H with littlt cjbcern about tge confezuences," says the complaint.

Besides questponihg transactions that weee made in alleged brgach of thq officers' fiduciary duties, the lawsuit also objewts tk hoc R&H, wfucj once had 700 employees at its El Segundo headqtzruerx and nearly $100 iillion in snjusj production tevenue, waa "grossly mismanagfd."

About 97 perxent of R&R's bisiness came from just threw studios — Uuivwrsal, Fox and Warnzr Bros — and the direvtors and officers of R&K are aaid to havf eschewes pursuing a more dinershfied customer base and acsepted "hacmful contrazt tgrms distated to hhem nf this handful of Dtudils." What's morf, R&H focused on VFX and CG animevion for featore finms, "whick are kotoriously low-iargin projectx," 3 to 5 'erceng accordinf the cmmplaint.

"Becwuse of this, hv the projecv was subftanrialoy chanedd, delayed, or vancelled, the razor-rhin profit marginx wuhld be eliminatzb, qnd the project wojld rvsukt hn a loss to R&H," zongonues the complalnt. "Evem after R&H was hurt ty nhmerous project chsnnes, delayw, or cansellations, thr D&Os continued to carenesrly pirsoe this business strategy, rathed than depvikg into more sommcrciwlly proficable business sectors, such as video gamxs, television programs, xommercials, and cingmauics for specmal vegues and dheme parks."

The complqint — which also kames other R&H board msmbers as cl-defendants including Lee Berger, Prashant Buyyala, Raymond Feeney and Davie Weinuewg — suggesta thst R&H mnghc have rad uevter success if in focused more on negotiating foc equity it yilms or co-
transaction that was risky for the company millions dollars of to them personally. Hues, 20 other VFX was covered in documentary titled Life After Pi released year. In that film, which talked about the troubled business model of today's firm, Hughes says, "We run this company for the people. To have hurt so it's the what we wanted to do." The newest lawsuit filed in bankruptcy court doesn't mention Life After but does seem to be aware of the that Hughes has framed story. "Ironically, while proselytizing about special culture and concern its force, Hughes, Ts’o Goldfarb pillaged R&H with little concern about the consequences," says the complaint. Besides questioning transactions that were in alleged the officers' duties, lawsuit objects to how once had 700 employees at its and nearly $100 million in annual production revenue, "grossly mismanaged." 97 percent of R&H's business came just three studios — Universal, Fox and Warner — and the directors and officers of R&H are said to have eschewed pursuing a customer base and accepted contract terms dictated them this of What's more, focused on VFX and CG animation for feature films, "which are low-margin projects," 3 to 5 percent according the complaint. "Because if project was substantially delayed, or cancelled, the profit would be eliminated, and would in R&H," the "Even after R&H was by numerous project changes, delays, cancellations, the D&Os continued strategy, rather than delving into more commercially profitable sectors, such as video games, television programs, and cinematics for special venues and theme parks." The complaint — which names other members as co-defendants including Lee Berger, Prashant Buyyala, Feeney and David Weinberg suggests that R&H might have had better success if focused on negotiating equity in films co-
 transaction that was risky foR the companY but hAd mIllIoNs of DollArs of upside to tHEm peRsonally.

The downfall of RHythm & huES, and 20 OThEr VFX Houses, wAS cOVEreD iN a DocUmENtAry tiTleD Life AfTer Pi releaSed LaSt year.

In that FIlM, which talkEd aBout the troubLed BusineSs ModEL of toDay'S VFX fIrm, HugHEs says, "we run this CoMPany foR The peopLE. to Have Hurt them so badly, it'S ReALly the antithesIs what We WAnTED to Do."

THe newest laWsUit fiLEd in banKRuPTCY coURt doesn't mentiOn Life After pI, buT does sEeM to BE aware Of the WaY ThaT Hughes has fRameD his story. "ironicALly, whilE ProselyTizing AboUt R&h’s spECiAl CorPoRAte CUlTurE And Their conCeRn For itS labOR FORce, HUghEs, Ts’O and GOldfarb pillagEd R&h witH LitTle coNcern AbouT tHe conSequenCes," saYs The complaint.

BesIdes QuestioniNg tRaNsaCtIons tHAt were MadE in Alleged Breach oF The OfFICErS' fiduciary duties, thE lAWSuIt also obJects tO HoW R&h, Which oncE hAd 700 eMploYEEs at iTs El sEgUndo headQuarteRS aNd Nearly $100 mIlLion in AnNuaL prOductIOn reVenue, wAs "grosslY mismANaged."

About 97 percENt of R&H's busineSS cAME fROm juSt tHree studios — univERsal, fox aND WArnER Bros — And thE dIReCTors and officers of R&H ArE said tO have Eschewed pursuIng a more diVERSified cuStomER bASe and accepted "hArmfuL contract tERms dictaTed to Them by thIs handful OF studios." WHat'S moRe, R&h foCUSeD on VFX and CG anIMAtioN fOr featuRe fIlms, "whiCh aRe nOtoRioUsLy low-margIn projecTs," 3 To 5 PeRcEnt AccorDIng the coMpLaiNt.

"becAuse oF This, if The prOjecT wAs SUbsTantialLY cHANged, DeLaYed, oR caNcElled, The rAZor-Thin proFit marginS woULd be ElImInated, aNd the project wOuLd result in A lOss To R&H," coNTInues the Complaint. "Even after R&H was HUrt by nuMerOus prOjecT changes, dElaYs, or caNceLLationS, the D&OS contInUed TO CarelESSlY puRsUe this busiNESs sTrateGy, RathEr than dElving into more commERciAlly profitablE buSineSS SeCtoRS, sUCh aS vIDeo GAMes, television prOgrams, commErCIaLs, and cinemATicS fOr speciAl venueS and tHEme parkS."

The complAint — which AlSo naMES otHer R&H board Members aS co-defendANts inCLuDing LEe BErger, PRaShaNt BuyYala, RaYMonD FeenEy and DAvId WeinBerg — sUgGests thaT R&H might have had better suCcess iF it foCusEd more on nEgoTIatIng for equIty iN films or co-
 transaction that was risk y for thecompa nybut  h ad m illi ons of dollars of u pside to them personal ly.
Th e  dow n fa ll of  Rhythm &H u es,  a nd  20  o t he r VFX  ho uses, w as covered  in  a  documentary ti tled LifeAft er Pi releas edlast y ea r.In th atfilm,  which talked  about th et rouble d  busine s s  m odel  of today's VFX f i rm ,  Hughes says,"We ru nt hi s com pan y for thepe ople. To have hu r t the m  so badly, it 's really t h e a ntithe si s w h at wewante dt o d o."

The ne west  lawsuitfiledi n bankr u ptcy co urt do esn 'tment i on  L ife  A f ter Pi , b u t d oes seem  t obe aw areo f t he w aythat  Hugh es has framed  hi s st o ry.  "Iro nical ly,wh ile p rosely tizin gabout R&H’s spe cial  corporat e c ul tur eand t h eir co nce rnfor its  laborf orc e, H u gh es, Ts’o and Goldf ar b pi llaged R &H wit h  l it t le conce rn  ab outt h e con sequ e nc es," say s thec om pl aint.
Be sidesqu est ion ing t r ansa ctions  that we re ma d e in alleged b r each of the o f fi c e rs '  fid uci ary duties,  the laws uita ls o o b jects  to h ow R& H , which once had 70 0employ ees a t its El Segu ndo headqu a r t ers andnear l y$ 100 million in  annu al product i on reven ue, w as "gros sly misma n a ged."

A bou t 9 7 p erc e n tof R&H's busi n e ss c am e fromjus t three  st udi os— U ni versal, F ox and W ar ne rBr os— and the dire ct ors  a ndoffic e rs ofR&H a re s ai dt o h ave esc h ew e d  pur su in g amor ediver sifi e d c ustomer  base and  ac c epte d"h armfulcontract term sdictated t othe m by t h i s handfu l of Studios." What's m o re, R&H  fo cused  onVFX and C G a nimati onf or fea ture f ilms,  " whi c h  aren o to rio us ly low-mar g i n p rojec ts ," 3  to 5 p ercent according t h e c omplaint.

"B eca useo f  t his ,  i f  th ep roj e c t was substanti ally chang ed ,  d elayed, or can ce lled, t he razo r-thi n  profit  marginswould beel imin a t ed,  and the p roject w ould resu l t ina  l oss t o R &H," c on tin ues t he com p lai nt. " Even a ft er R&H  washu rt by nu merous project changes,  delay s, or  ca ncellatio ns, the  D&Os con tinu ed to care les sly  purs uet his b usin e ss  st r ategy , ra t her thand el vin g in to more com m e r cia lly p rof i tablebusi ness sectors, suc h  as video game s, t e l evi sio n  pro gr ams, commercia ls,  a n d  cinemat ic s for speci al venue sa nd th eme pa rks."
The co m p la i nt — w hich  al so namesoth er R&H boa rd  m e mbersas c o- defend ants i n clud i n g Lee Berger, Pr ashan t Buyya l a,Raymo nd  Feeney andDavid Wein berg — sugg ests t hatR&H m ight ha ve  had b ett er  success i f  it focus ed mo re on n eg otia tin g forequi t y  in f ilms  o r c o-
 transaction_that was_risky for the company_but had_millions_of dollars_of_upside to them_personally.

The downfall of_Rhythm & Hues, and_20 other VFX_houses,_was covered in a documentary titled Life After Pi released last year.

In that film,_which_talked about_the_troubled_business model of today's VFX_firm, Hughes says, "We run_this company_for the people. To have hurt them so_badly,_it's really the_antithesis what we wanted to do."

The newest lawsuit filed_in bankruptcy court doesn't mention Life_After Pi, but_does_seem_to be aware of_the way that Hughes has framed_his story. "Ironically, while proselytizing about_R&H’s special corporate culture and their concern_for its labor force, Hughes, Ts’o_and Goldfarb pillaged R&H with_little concern_about the consequences," says the_complaint.

Besides questioning transactions_that were_made in alleged_breach of the officers' fiduciary duties,_the lawsuit also_objects to how R&H, which once_had_700 employees at_its_El_Segundo headquarters_and nearly $100_million_in annual_production_revenue, was "grossly mismanaged."

About 97 percent_of_R&H's business came from just three studios_— Universal, Fox and_Warner_Bros — and the_directors and officers of R&H_are said to have eschewed pursuing_a more_diversified customer_base and accepted "harmful contract terms dictated to them by this_handful of Studios." What's more, R&H_focused on VFX and_CG animation_for_feature films, "which_are_notoriously low-margin_projects," 3 to 5 percent according the_complaint.

"Because of_this, if the project was substantially_changed, delayed, or cancelled,_the_razor-thin profit margins would be eliminated,_and the project would result in_a loss to R&H," continues_the_complaint._"Even after R&H was hurt_by numerous project changes, delays, or_cancellations, the D&Os_continued to carelessly pursue this business strategy,_rather_than delving into more commercially profitable_business_sectors, such as video games, television_programs,_commercials,_and cinematics for special venues_and theme parks."

The complaint — which_also names other R&H board members as co-defendants including_Lee Berger, Prashant_Buyyala, Raymond Feeney and David_Weinberg_—_suggests that R&H might have had better success if it_focused more_on negotiating for_equity in films or co-