The situation is doubly cruel. The studio has been on an emotional high, being nominated (and most agree, a front-runner) for an Oscar on the work done in "Life of Pi." (The studio created one of the lead characters, the tiger Richard Parker.) Rhythm & Hues also created effects in another VFX-nominated film: "Snow White and the Huntsman." A week ago, the studio won a BAFTA for "Life of Pi."

A few weeks ago, it looked as if the situation was under control, with a deal expected between Rhythm & Hues and Prime Focus. But it appears the deal is now off, though there is no solid information about it at this time. At the time, a $20 million bridge loan was given by three studios to keep Rhythm & Hues afloat until April, when work on a number of films would have been completed and the deal with Prime Focus complete. Those films include: "300: Battle of Artemisia," "Percy Jackson & the Sea of Monsters," "The Hunger Games: Catching Fire," "RIPD," and others. 

The studio has a grade-A reputation, having tackled some of the industry's most jaw-dropping work in recent years. Perhaps this will prompt a buyer for the studio, as it did not long ago for Digital Domain.