Looks like they discovered some questionable funnelling of money to fake businesses. If you read further into the article, it seems like an inditement of the entire VFX business model.
Part of the lawsuit is based on R&H accepting “harmful contract terms dictated to them by this handful of Studios.”
It goes on:
R&H bid aggressively for studio films, sometimes submitting bids below calculated out-of-pocket expenses, or other times not obtaining enough information for an informed bid. “These reckless and/or ignorant bidding practices ultimately led to R&H entering into numerous toxic contracts,” says the complaint. "Whether done purposely or carelessly, according to Buyyala, the bidding process was ‘flawed’ because the bids did not accurately account for the work to be completed by R&H.
The VFX bidding process is ‘flawed’? No shit.
You have to love that the new R&H lawsuit effectively states "R&H failed at being a VFX house because they continued to be a VFX house"— Gordon C. (@vfxgordon) February 16, 2015
It effectively states "R&H should have done something other than VFX if they wanted to survive as a company"— Gordon C. (@vfxgordon) February 16, 2015
Or, basically: "The owners of R&H exhibited gross negligence by attempting to run a viable visual effects company"— Gordon C. (@vfxgordon) February 16, 2015
"Everyone knows you can't survive as a visual effects company, therefore R&H should have done something else"— Gordon C. (@vfxgordon) February 16, 2015
Photo Credit: Judge Doom by Me2