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Digital Domain Defaults On Loan; Stock Drops To All-Time Low

I admit it, it’s hard to look away from the unfolding drama of animation/vfx shop Digital Domain‘s financial woes. Earlier today, Digital Domain stock sank nearly 32% to a new low of $1.41. The drop happened after the company defaulted on a $35 million dollar loan.

The has plenty of not-so-nice details on Digital Domain’s long-term prospects. In a filing with the Securities and Exchange Commission (SEC), Digital Domain said it now owes $51 million to an investment group led by New York-based Tenor Capital Management. That amount includes $16 million in interest and penalties. The company also hinted in its filing with the SEC that it may seek bankruptcy protection: “An inability to quickly access additional sources of liquidity to fund the company’s current operating cash needs would materially adversely affect its financial condition and would require it to seek relief or protection from its creditors.”

Digital Domain CEO John Textor, who apparently doesn’t just create holograms but also constructs entire alternate universes that have no foundation in reality, doesn’t think $51 million is a lot of money nor does he even think the company defaulted on its loan.

In the video posted above, he told WPTV, “We, in my opinion, owe a very small amount of money to the banks versus the value of this enterprise. This is all about a disagreement with a lender. There was no missed payment or financial default. This is about a contractual dispute.”

One would assume that with Digital Domain’s financial troubles, Textor would be dedicating all his energies to saving the company. Not so. While hundreds of his employee’s livelihoods lay on the line, Textor has been spending some of his time trying to get Florida courts to go after the real villains: random people writing comments about him on the Internet.

According to a report published today on the website GossipExtra, Textor and his wife Debbie have asked Florida courts to force Yahoo! to take down message board posts about his financial dealings because they are causing “extreme emotional distress” to his family. Says Gossip Extra:

Textor, meanwhile, tried to have his complaint against cyberstalkers John Doe No 1 and No. 2 shielded from the public. His motion was denied by the judge in Stuart [Florida]. John Doe No. 1 posts under the name investedjp and No. 2, flypapernhoney. Both, according to the paperwork, have been writing statements that Textor described as “increasingly desperate and hostile” on a Yahoo Finance message board.

In one comment, investedjp — who claims to be a Palm Beach investor — threatens to link to negative Securities and Exchange Commission filings about Digital Domain. In early August, another posting warned Textor that he could end up in a federal prison cell with Madoff. Some have mentioned his children, and one his comely wife Debbie.

No other major animation website has been covering Digital Domain’s story besides Cartoon Brew, but there are other fine sources to look toward for coverage including the business section of the Palm Beach Post and VFX Soldier, the latter which has Digital Domain co-founder Scott Ross participating in the comments section.

UPDATE (September 5, 2:35pm ET): John Textor is finally WINNING! Today, he succeeded in stifling the First Amendment rights of other Americans by convincing a Florida judge to remove Internet comments that revealed his financial dealings. Meanwhile, Digital Domain stock has plummeted a further 24% as of this afternoon to a new all-time low of $1.07.

  • Walt

    Well, if that’s a small amount of money they owe. Why can’t they pay their interns? Hmm…

  • Moni

    Delusional is not a strong enough word for this situation.

  • I like that the vice mayor (?) seems to have been sleeping late in an office cupboard prior to being asked for her insights.

  • Trevor

    Does this affect just the Florida location, or all DD studios? I know there has been all sorts of weird legal classifications of the Florida studio, that on paper it’s only barely connected to the rest of DD proper. Basically my question is if things go where they seem to be going, does this affect jobs in LA, Vancouver, etc etc or are they shielded from this?

  • Jennifer

    Amid, I don’t know why you would wish for the failure of an animation company. Your personal assault on Textor may give you satisfaction, but there are a lot of good people who are hoping that DD weathers this storm.

    And I don’t see how you could attack Textor for defending his family in Florida courts. Some posts have “mentioned his children, and one his comely wife Debbie” should be enough for you to pull back a little on the snide remarks about putting his family before his business.

  • Toonio

    Case of bad karma I guess.

    It’s time for business like DD to wise up, be fair to their employees and if they can’t grow their business organically better stay as they are instead of sending their brand to hell.

  • Jennifer – No one desires the failure of an animation company nor the loss of jobs. One thing is clear though: Digital Domain is doomed to failure as long as Textor is managing the company. He has demonstrated a fundamental lack of understanding about the vfx/film industry arena — his comments last March about free student labor made that much painfully clear. Combine that with questionable business dealings and a reckless growth strategy not wedded to any long term plan, and you have the recipe for failure. The sooner Textor leaves, the better the chance that the jobs of rank-and-file DD employees might be saved.

    And to address your point about Textor’s fear for his family, if you read between the lines, that’s nothing more than a clumsy ploy to gain sympathy from a judge. Claiming he was concerned for his family was a pretext to silence people who have knowledge of his financial dealings.

  • Pedro Nakama

    There was a commercial for a moving company before the video. Coincidence?

  • Chris Morson

    This proves Textor doesn’t know how the internet works, you remove a few comments under one user id and then the person just creates a new user id and does it again, you can’t stop this kind of thing, he is fighting a hopeless battle. The damage is done even if they can pull out of this financially for the short term who in their right mind will want to take a job at a company with these kinds of problems.

  • Jennifer

    Amid, you’re right Textor is a horrible manager, but since he owns most of DDMG it’s doubtful that he’ll resign. But we can hope, can’t we?

    As for “a clumsy ploy to gain sympathy from a judge” –
    Read your own column.
    Some “posters” have mentioned his children, and one his “comely wife Debbie”.
    If these posters wanted to make a difference they had to be idiots to mention Textor’s wife and children. Legally, it gave the judge a legitimate reason to silence them.

    And I think it took Textor less time in court to stop these posters than it took you to write a column with the heading: “Douchey Digital Domain CEO John Textor”.

  • Gavin Greenwalt

    If this puts an end to DD’s plans to use slave labor then in the long run this could be for the best. Hopefully some talented Digital Domain folks are putting together a plan to extract the wealth of great artists from the cluster**** that is their employer.

  • J

    Vancouver studio is deeply affected…


  • The accurately disparaging, insulting, amusingly threatening posts at Yahoo haven’t slowed down much. I just saw a comment there a few minutes ago about “sinking a boat”.

  • James

    I’m seriously surprised he wasted his time and money doing that, especially since the defendants remain anonymous. Sure, the comments might include confidential information, but without knowing who is posting the comments, it just becomes a futile effort since it can easily be reposted again on a different account or IP address

    Such an action would be a complete embarrassment to a more well-known company head.

  • Alissa

    Shouldn’t Textor* be spending more time keeping investors happy and his company afloat instead of yelling at the internet?

    However whoever is insult/threatening his family needs smacked upside the head. You don’t pull that kind of crap. I don’t care “but it’s the internet”, show some common human decency and leave the kids alone.

    Now calling out an imbecile for his idiotic business choices? Totally kosher.

    *Please tell me that there’s a giant fighting robot with that name. If there isn’t there should be!

  • animguy

    It’s embarrassing that other animation and cg sites don’t cover this info.

  • Breaks my heart…. DD is a great company. Hope Mr. Textor finds his way out of this horrible mess.

  • If you honestly believe that any court or judge, anywhere, is going to stop nasty comments on the internet, you are terribly uninformed as to how these things work. There is not “stopping these posters” here, it’s not possible in any feasible way short of completely removing any trace of himself from the internet and the minds of those he’s managed to irritate.

    The BEST case scenario with Textor in that situation is, interestingly enough, pure ignorance as to how Yahoo comments (and, in general, any site’s comment system, really) function. If he honestly believes it’s impossible for someone to anonymously create second, third, and even fourth accounts on nearly any website in order to continue posting whatever they please, then we can simply assume he has no idea how the internet works and can give the guy a little more leeway due to stupidity/ignorance. Not a GOOD thing for someone who’s managing a studio in the information age, but there it is.

    Given how unlikely that really is, however, the most plausible scenario is the conclusion Amid and many others have come to: He was looking to wring sympathy out of the situation, hoping it’ll deaden some of the hits he’s about to take for being an awful person and an even worse businessman.

  • Context is key. How were his family mentioned? Something like “How can you face your wife and children when you are wrecking the lives of other families” is intemperate, but not a threat. And the Gossip Extra report does not put ” comely wife Debby” in quotes, leaving it unclear just who is calling her comely.
    Textor is ruining DD through mismanagement. He might be able to shut down some of the less prudent critics, but those who stick to the facts are within the law.

  • Steve Gattuso

    “but there are a lot of good people who are hoping that DD weathers this storm.”

    And some of them may even be getting PAID!

  • I’m really sorry for the people working at DigitalDomain, but Textor makes me sick and I can’t describe how much I grant him to fail.
    Especially after employing interns, let them do a third of the work and let them pay for it.

  • what the hell is wrong with being ‘comely’ anyway? This guy advertised that he could get the most vulnerable to work for no pay and his profit. He used it as a selling point for his business strategy. Exploitation? or massive over sight? Defend that if it’s possible. No one wants to see people lose their jobs, but the fella could lose his in a second and remain chest deep in second homes and speed boats

  • I agree with Jennifer. The whole Digital Domain thing, as relevant a topic as it may be to the content of this site, is tragedy porn, honestly. There is a vast enough animation industry that I think you guys are misdirecting your efforts in covering these events so closely. Sure, Textor may have goofed, but who hasn’t? This is a premium animation blog and I think you’re above this kind of thing. It’s borderline tabloid.

  • crtoons

    Man this guy’s a pice of work!! In a strange ironic way, I’m really happy that the company’s sucking wind, too bad it’s going to effect all the poor staffers that are working there. This is just another example of his conceit and lack of his understanding of what’s happening in the real world. It would be great if he, as the captain of the ship would go down with it, but unfortunately he’ll be taking down everyone else with him and probably still come out smelling like a rose with a better job at a different company and making more money!

  • Brian
  • Christine Maher

    Textor is a snake in the grass and he short sold the stock ~ .is why the company went under and by the way he did not resign HE WAS FIRED!!! Unfortunately he was not found out soon enough to save the company.