I still remember the day that I started at Rhythm & Hues.

During our orientation, we all were told the same story about the inception of this company we were about to embark upon a journey with: The founders, including John Hughes, had been working elsewhere over 25 years ago, and things were going well as far as any of them knew. One day, though, they showed up to work to find the office doors chained shut.

The company had gone under and was not able to fulfill its financial obligations to its staff, so they closed up shop and took off. Every worker was left stranded, unemployed. It was then that the people who came to found Rhythm & Hues joined together and decided to start their own scrappy company.

This company would be one that was built with a “horizontal” management structure, where the employees would have full transparency regarding their employer’s fiscal state and future.

Also read: Troubled Visual-Effects Company Rhythm & Hues Gets $20M Studio Infusion (Exclusive) [3]

Sitting there, bright-eyed with the enthusiasm that only a new career can bring, it was incredible to hear this. A company built upon the values of honesty and integrity, where its executives and owner were willing to discuss business in an open forum where employee-employer interactions were not only encouraged, but also expected.

I had never experienced anything close to this. The majority of my work experience consisted of my bosses telling me to jump, and I reluctantly would ask how high. I’d been laid off before with no notice, been verbally berated for the smallest of infractions, but that was about to be a thing of the past. This was a company that cared about the well being of its employees.

Fast forward almost two years later, and the atmosphere had changed. Not just in our L.A. office, either. Co-workers in Vancouver and India were starting to feel it as well. The “vibe,” as one friend called it, wasn’t right, and there was too much secrecy.

The last four weeks had been trying. Our weekly company meetings, the ones where finances and project bidding were discussed, had been canceled repeatedly. There were a lot of unfamiliar faces around the studio, most of them a series of suits who paraded in and out of the executive offices in hush-hush meetings with higher-ups in studio management and accounting.

There were rumors about our financial situation, but they were small brush fires between low-level employees, coordinators and assistants, like myself, in various departments. At first it was that we were looking to collect on a debt, then it was that studios were looking into our accounts before approving us a loan.

However, there was nothing concrete available for us to look into with much diligence. The speculation made for an uncomfortable work environment, and the secrecy took its toll on company morale. Employees were openly questioning what was happening and becoming disgruntled over the repeated meeting cancellations.

Rumors and blind speculation can erode faith, no matter how deep the surplus, until there’s nothing left but distrust.

When I came in this morning, there was a new rumor fresh off the presses: Prime Focus, another visual-effects house, was looking to purchase our company, and it had put together a comprehensive offer. I didn’t believe it. The rumors about loans and cashing in favors with studios all made sense. They were things that would be too complicated to explain to employees while the deal was still in progress.

The idea of us selling even a portion of our studio to another company, though, didn’t seem possible. I still, foolishly, clung to that story I was told on my first day about John and how he built this company with a personal goal to make sure that his employees would never be left out in the cold about major company news. Something like this wouldn’t seriously be on the table if he hadn’t first thought to discuss it with employees after a prospective offer had been evaluated.

Apparently, 25 years can really alter your perspective and integrity.

When the article hit from TheWrap [4], it was almost cathartic. It was a relief to have weeks and months of muted speculation brought into the open and validated. To see Prime Focus’ name in the article, mere hours after hearing it whispered to me from another employee, only confirmed the validity of the piece in my eyes.

If our rumors had been brush fires, then the story online was the wind that helped carry those flames into full-on wildfire, catching and burning everything in its wake.

Within hours, the studio was abuzz, albeit with the morose reluctance that goes along with bad news. Our email server saw dozens upon dozens of replies to the article when it had been forwarded around the studio. Some people were furious, others tried to excuse the actions as business-motivated decisions to keep us afloat, and others made hackneyed attempts at effusive praise for our executive staff for their handling of the situation -- presumably in a cheap ploy to keep their jobs should a major staff upheaval occur in the coming weeks.

After the catharsis ebbed, however, I was left with a sense of dread for two reasons: The first is selfish, in the sense that finding a comparable job in my field in the current economic climate was akin to fly fishing in the middle of the Pacific. The second reason, though, was more difficult to deal with.

About an hour after the news broke, someone posted an article on the email server that the well-researched blog VFX Soldier [5] had published on July 25, 2012, about Prime Focus. The article was about how the company had been exploiting its Indian workforce by making them pay a substantial “security deposit” to secure their employment.

The employment contract dictated that they had to complete two years of labor at a meager salary to get the money back. They would have to work 16- to 20-hour days and seven-day weeks with no overtime. The employees were forced to forfeit the deposit if they voluntarily left or were terminated during the two-year period.

The article also stated that Prime Focus would routinely terminate employees shortly after a completed project, leading them to not only lose their jobs but also their deposits.

A lot of the friends I’ve made during my tenure at R&H are in our international studios. When talking with an Indian employee Monday night, he was incredibly distressed by the news that Prime Focus was looking at purchasing the company.

He was concerned about everything he’d read about them, and that he would either have to find new employment or deal with the less-than-stellar conditions at Prime Focus.

When I talked to him about the situation, and tried to give him the information -- as I understand it at this time -- I could hear how betrayed he felt, and it made me realize how much I agreed. If this were any other company, this would just be tacitly understood as part of the business. Digital Domain went under in a flash, and very few of us could have seen that coming. However, this isn’t any other company, and it’s certainly not Digital Domain.

This is Rhythm & Hues, a company that preaches honesty, openness and integrity. In my opinion, by not openly discussing this situation with the employees as it developed, every single executive in the company went against the values that the establishment was founded upon. By meeting in secrecy, hiding out behind closed doors and in conference rooms, they actively betrayed the trust of every single employee in the company.

Perhaps I was naïve to so thoroughly believe that story I was told during my orientation, but the fact that a company that actively promotes positive discussion could keep such a serious development a secret should offend every single employee that ever trusted its leadership.

I don’t know what the next several weeks have in store, but I know that the road is going to be a rocky one. I imagine that a lot of people I call friends will depart for greener pastures; others will simply stop caring about their work until April when they find out the fate of their employment and the company’s future. Rhythm & Hues has been a standard-bearer in the visual-effects industry for as long as I can remember.

The studio has two of its films nominated for Academy Awards this year, and several projects still left on the slate. They were a beacon of light in the darkness of a non-unionized or regulated industry, but that torch has an expiration date, and I’ll be curious to see who is going to snuff it out: John Hughes or Ramki Sankaranarayanan of Prime Focus.

TheWrap has invited Rhythm & Hues and Prime Focus to respond to this blog.