The acclaimed visual effects firm responsible for the dazzlingly realistic Bengal tiger in Life of Pi has filed for bankruptcy protection - only hours after winning a Bafta.
Rhythm & Hues Studios (R&H), whose special-effects artists have worked on more than 145 films from Babe to Django Unchained, has been pushed to the edge amid growing concern about the health of Hollywood's leading animation studios.
On Sunday night the company's work on Life of Pi was honoured by the British Academy with an award for Best Special Visual Effects. And R&H is up for two Oscars later this month for its work on Life of Pi and Snow White and the Huntsman.
Yet a year after celebrating its 25th anniversary, the US-based company has been forced to seek Chapter 11 protection. The bankruptcy documents were posted online yesterday.
The decline of such an admired firm sent shockwaves through the film world. One visual effects head told The Independent: "It is a sad day when such a respected company faces issues like this. Many will be thinking: 'There but for the grace of God'."
R&H, which has a workforce of 1,400, hit difficulties after several film projects were cancelled and delayed, while it is believed that its competitive pitching rates, and decision to move into co-production left it financially stretched. "It was not one single event but a culmination of many that brought them to this point," one source familiar with the situation said.
Hopes were high last week that R&H would be saved, but a deal tabled by Indian rival Prime Focus fell through. Founder John Hughes called workers into a meeting on Monday to outline the perilous financial position.
The fall from grace of one of the America's best-known effects companies has left questions about the state of the industry. This follows news that DreamWorks Animation was looking to slash costs, possibly culminating in a string of job losses.
Companies face a tough economic climate, small profit margins, and competition from across the globe.
Sir William Sargent, chief executive of UK company Framestore, said: "The industry is in a tough place because studios slowed down in 2012 and didn't shoot much. Margins are tight, which is a cycle that happens every few years. It calls for careful navigation." R&H has started laying off staff, while others continue to work on existing projects. The president of the company's film division, Lee Berger said R&H was "seeking to secure financing for future growth" adding it would "come out of this situation stronger".
Life of Pi was widely praised for its stunning visual effects. The R&H team created three-quarters of the final film's visuals, building the majority from scratch. The film's director, Ang Lee, pictured left, called their work "impeccable".