Effects Co. Investors Say Unlawful Penalty Doubled Debt

Law360, Wilmington (November 20, 2012, 10:53 PM EST) -- A group of Digital Domain Media Group Inc. investors launched an adversary suit in Delaware bankruptcy court Tuesday claiming its senior creditors inflated their secured claim by imposing an unlawful $28 million penalty that doubled the special-effects shop's debt in six months.

Filed by PBC Digital Holdings LLC and a trio of related Florida-based limited liability companies, the complaint seeks to thwart the senior noteholders' $70 million secured claim set to be repaid under the busted firm's final debtor-in-possession financing order.

That $70 million claim should...
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