Leading Vfx studio Rhythm & Hues won BAFTA award for Best Visual Effects for its work on Ang Lee’s Life of Pi on Sunday. But the good news was dampened quickly by spreading word that employees had been contacted and told not to come into the El Segundo studio Monday.

The studio has been having cash flow problems and taking aggressive actions by laying off some of 1400 employees. Brian Davidoff, a bankruptcy attorney with law firm Greenberg Glusker, confirmed that Rhythm & Hues is preparing to file for bankruptcy protection in Los Angeles on Tuesday afternoon.

Rhythm & Hues had hoped to close the sale of the company, reportedly to Indian-based Prime Focus. But that didn’t work out.

In meeting with employees on Monday, executives indicated that 200 employees will lose their job due to difficulties faced of competing with tax subsidies offered in the UK and Canada.  Rhythm & Hues was given an infusion of $20 million by three major studios – Universal, Twentieth Century Fox and Warner Bros. – to keep it afloat through April

Founded in 1987, Rhythm & Hues has created effects for such movies as “The Golden Compass,” “Babe,”“Chronicles of Narnia”, “Snow White and Huntsman”

Two prominent Studios have declared bankruptcy in last six months. Earlier in September last  year , James Cameron’s Digital domain had filed for bankruptcy protection in Delaware running short on cash after months of heavy spending on ventures such as “The Legend of Tembo,” .

The firm sold its assets to a joint venture formed by Beijing Galloping Horse Film Co. and India’s Reliance Mediaworks Ltd.

Digital Domain and its affiliates contributed to more than 90 major motion pictures, including “Titanic,” the “Transformers” series, “Pirates of the Caribbean: At World’s End” and “TRON: Legacy.”