A top Hollywood payroll services company filed a liquidation bankruptcy action Tuesday, a day after it sent its employees home and told them not to come back to offices in Los Angeles, New York, Toronto and London.
Axium International Inc., based at 5800 Wilshire Blvd. in Los Angeles, was one of three major companies that process payrolls for and provide related services to production companies, studios, trade unions and other industry clients.
The Chapter 7 petition, filed in U.S. Bankruptcy Court in Los Angeles, shed little light on why the company suddenly went belly up, except to note that it "lacks sufficient liquidity or other resources" to meet its financial obligations.
Axium executives told employees in e-mail messages Monday and Tuesday that the company had fallen victim to a "liquidity crisis" that forced it to cease all operations, said Randy Klinenberg, who headed RightsMax, the company's rights-management software unit.
"They sent out an e-mail that said everyone needs to go home and not go back to work, because the bank had frozen the accounts and we were no longer in business," Klinenberg said.
People familiar with the situation said the company's liquidity problems involved an outstanding multimillion-dollar loan. There was no indication in the bankruptcy filing that it was related to the writers strike.
Neither John Visconti, one of Axium's principal owners, nor David Poitras, the attorney who filed the bankruptcy, returned phone calls seeking comment Tuesday.
Jeff Begun, an Axium vice president, said payrolls the company had been processing were being moved to competitors Cast & Crew Entertainment Services and Entertainment Partners.
"We have worked it out so it will be seamless for clients," he said, declining to discuss other aspects of Axium's collapse.
But at least one production company was rattled by Axium's abrupt exit.
"We were totally caught off guard," said Susan Gelb, vice president of finance at Crest Animation Productions Inc., a Burbank company that had contracted with Axium for about 20 years. Her contacts at Axium "certainly didn't have a clue that this was happening," Gelb said.
Axium had been processing weekly paychecks for the company's 25 employees, which include animators, directors and layout artists.
Early Tuesday afternoon, a newly out-of-work Axium employee called Gelb to tell her to pick up her company's time sheets.
Gelb said she did not expect her company to suffer financially, because Crest didn't have a deposit with Axium and probably would transfer its paychecks to another processing company.
"My company is one of the lucky ones," she said. "I'm thinking everybody will get paid by the end of the week."
Yet she said Axium's departure was a blow to the already suffering entertainment industry.
"Any time you take a major player out of any area, that competitive edge is reduced somewhat," she said. "It's a really bad time for the industry to be hit again."