MUMBAI: A US bankruptcy court has approved the sale of Academy Award-winning visual effects and animation studio Rhythm & Hues to a wholly-owned affiliate of Los Angeles-based Prana Studios, which has Mahindra Group chairman Anand Mahindra as one of the investors.

At a hearing held in US Bankruptcy Court in Los Angeles on Friday, Judge Neil Bason approved Prana Studios affiliate 34x118 Holdings as the winning bidder after a two-day auction.

Prana Studios is a U.S. animation and visual effects studio with offices in Los Angeles and Mumbai, India.

The winning bid also had to be approved by Twentieth Century Fox and Universal Pictures. Apart from 34x118 Holdings, the auction process saw bidding from Prime Focus World, a subsidiary of Mumbai-based Prime Focus and Brave Vision Investments, which is connected to Chinese-American film distributor China Lion Film Distribution.

As many as five bids were received till 22 March, the last day of bidding. However, only two bids were deemed qualified.

According to media reports, the winning bid includes $1.2 million of cash, liabilities of up to $17 million, and certain other payment and debt obligations.

"Our partnership will allow R&H to continue the business of creating world-class digital imagery," said Prana Studios SVP, VFX Jeffrey A. Okun.

Okun said R&H will remain a standalone company focusing on cutting-edge visual effects and innovative technology.

"R&H will be complimented by Prana?s world-class long-form animation. Our complimentary talents and relationships will create a new, best-in-class one-stop boutique provider of digital imagery to clients globally. With the additional support of our strong investor group, we are confident R&H will continue to be the innovative quality leader in our field that they?ve been for 30 years. We are thankful to Universal and Fox for their overwhelming support," he added.

The company?s assets were acquired from the court by 34x118 Holdings, which is the new operating company.

Allan Soong of Deliotte CRG will serve as Chief Restructuring Officer of the new operating company, and will work with Lee Berger as President, Erika Burton as Co-President, and Gautham Krishnamurthy as CTO to restructure the operations while maintaining the creative expertise which comprises the heart and soul of the R&H brand.

"This is a positive outcome to a difficult situation," said Lee Berger , "and we are thrilled to be able to put this process behind us. We are grateful for Prana?s support as well as the support of their investor group, and are excited to begin the next chapter of R&H?s history."

Mahindra Group chairman Anand Mahindra said, "We are delighted to have been early-stage investors in Prana Studios. This bold move will make them the animation / VFX leaders with global delivery capability and will substantially increase the scale and complexity of their work."

Founder of Sherpalo Ventures and Google Board member Ram Shriram said, "I am excited for Prana - the best at full service digital animation, and now digital VFX. This new arrangement allows for a single stop, stable long term solution for all the digital creative needs of the studios."

Nexus Venture Partners Co-founder Naren Gupta stated, "Prana?s focus on high-quality animation and VFX is a cost-effective business model that has made us a favorite partner of leading studios around the world. Acquisition of Rhythm & Hues will allow us to offer an even broader platform to our partners. Prana and its founders are continuing to innovate the way high-quality creative activities should be performed. I remain a huge fan of Prana and its management team."

Peter M. Gilhuly of Latham & Watkins, Andrew Walter of Evolution Media Capital, and PJ Shapiro of Ziffren, Brittenham and Branca represented Prana Studios, Inc. in the negotiations. Brian L. Davidoff of Greenberg Glusker represented Rhythm & Hues.

Rhythm & Hues is a global production powerhouse for the creation of visual effects and animation for Hollywood movies. Among its 145 screen credits are "Life of Pi," "The Golden Compass" and "Babe," Academy Award winners for Achievement in Visual Effects, (in 2012, 2008, and 1995 respectively). R&H is also the recipient of four Scientific and Technical Awards from the Academy of Motion Picture Arts and Sciences (AMPAS).

With headquarters in El Segundo, California, and additional facilities in Mumbai & Hyderabad, Kuala Lumpur, Vancouver, and Kaohsiung, R&H Films offers filmmakers a dynamic creative resource with a vast array of technology and talent.