Rhythm & Hues Bankruptcy: $1 Million Settlement for Fired Workers

Last October, Rythm & Hues, an academy award-winning VFX firm, agreed to settle a lawsuit for $1 million after they wrongly terminated workers and over unpaid wages.

Earlier this year, the company filed for Chapter 11 bankruptcy protection and terminated 238 employees. However, before the company was sold one of the employee who was terminated, Anthony Barcela, filed class-action lawsuit alleging violations of the Worker Adjustment and Retraining Act because Rythm & Hues did not give their employees the requisite 60 days of written notice before termination. The terminated employees also filed a claim for earned unpaid wages under California labor laws, including for 30 days beyond a fired employee’s termination. This lawsuit tends to show that employment law must be complied at all time, including when a company if on the verge of being dissolved.

Last month, a joint motion was filed in bankruptcy court that sought approval for a $1 million settlement for wages and benefits left outstanding. A judge already gave his pre-approval to the settlement but final approval is set to occur on December 13, 2013 at a final hearing. The settlement is the result of a mediation process that took place over the summer. However, had the parties decided not settle the case, the maximum that the plaintiffs might have collected would have been $3.6 million, according to court documents. The plaintiffs also had insisted that they be given priority status, potentially impacting claims made by the VFX firm’s other creditors. The court documents stated that Rhythm & Hues estate has about $6 million on hand (money it got from Prana as well as $4.2 million from the sale of real estate).

If you believe you have been wrongfully terminated by your employer and you have a claim against him over unpaid wages, please contact The Harman Firm, LLP.