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Digital Domain Fallout Continues

Fallout from the bankruptcy of Digital Domain Media Group includes a new lawsuit and a coming patent auction.

Legendary Pictures has filed a lawsuit in Florida federal court against ex-Digital Domain Media Group (DDMG) CEO John Textor, according to a report by The Hollywood Reporter, looking to hold him personally responsible for the $3 million plus interest at eight percent, plus legal expenses.

Legendary Pictures is one of the largest creditors from last month’s bankruptcy proceedings for Digital Domain. According to the complaint, DDMG’s insolvency represented a default on a $3 million convertible note dated March 19, 2012. Earlier this month, Legendary demanded payment from Textor, who acted as a guarantor on the debt and allegedly hasn't paid.

Textor is also being sued by a "lifelong friend" over a promissory note worth $986,707, and is reportedly facing a fraud lawsuit from a shareholder.

In addition, Florida’s Department of Economic Opportunity, which provided DDMG $20 million in state funds to set up local operations, is now demanding money back and exploring all avenues for recovery.

"The payable in question is, by federal court order, now an obligation of the new owner of Digital Domain," says Textor in reaction to the lawsuit. "I am really not sure why they would be calling on me. This matter was resolved."

Last week, DDMG sought a bankruptcy judge's approval to sell other assets, including rights and interests to prospective films including The Legend of Tembo, The Art Project, Birds of a Feather and the The Lightning Catcher. Additionally, DDMG is looking to sell its animation studio in Port St. Lucie, its post-secondary education institute in partnership with Florida State University and its intellectual property assets.

IP assets could be of particular interest. Although the technology used to create the Tupac Shakur hologram can be traced to a patent held by Musion Systems, DDMG looks to auction six patents, two patent applications and one trademark relating to the technology of converting two-dimensional image data to three-dimensional image data.