A bankrupt movie studio was funded in part by state incentives.
The State of Florida is attempting to recover nearly $20 million from a movie studio that went bankrupt after receiving cash incentives from the government.
According to the Miami Herald, the Department of Economic Opportunity has hired two bankruptcy attorneys to recoup the money granted to Digital Domain Media Group in 2009. The company was founded by director James Cameron and was behind the special effects in the film Titanic.
The incentives helped convince the company to build a new, state-of-the-art studio in Port St. Lucie. But in September 2012, Digital Domain filed for bankruptcy, shuttered the studio, and laid off 300 Florida employees.
The Department of Economic Opportunity, which was created by Gov. Rick Scott, has issued a request for $500,000 to the state legislature to help recover the $20 million granted to Digital Domain.
Monica Russell, a spokesperson for the Department of Economic Opportunity, said, “The department will take any steps possible to seek the return of taxpayer dollars.”
Florida’s lawyers allege that Digital Domain breached its contract with the state by failing to give notice to state officials that it had declared bankruptcy.
Data from the U.S. Courts Statistics Division show that it the average time to complete a bankruptcy case is 16 months. It is unclear at this time whether the state will be able to recover any of the funds.
The bankruptcy raises questions about Florida’s cash incentives to lure businesses to create jobs in the state. Scott has requested the Legislature grant his administration greater leeway in issuing the payouts.
Florida has granted a total of about $4 billion in incentives to businesses, which amounts to nearly 16 percent of the budget, according to data compiled by the New York Times.
Enterprise Florida, a joint state/private organization, screens companies that are candidates for the incentives. They recommended against funding for Digital Domain due to the expected low rate of return on the investment. But officials granted the funds anyway.
Gov. Scott’s office is conducting an investigation into the process by which Digital Domain’s funding was approved.
The bankruptcy code permits creditors to go after assets in Digital Domain’s estate, but Florida is only one of many investors and local governments trying to recoup some of their investments in the company.
Digital Domain sold its assets within two weeks of filing for bankruptcy for just over $30 million. The company’s name appears hundreds of times in Delaware court filings, where it filed for bankruptcy protection.
O. Reginald (“Reggie”) Osenton is the Owner and President of Osenton Law Offices, P.A. If you need a Brandon bankruptcy lawyer, Tampa bankruptcy lawyer, or Tampa bankruptcy attorney, call 813.654.5777 or visit http://www.brandonlawoffice.com/