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'A mess' left after payroll firm closes

Filmmakers and others find their money tied up and many go unpaid in the collapse of Axium.

January 10, 2008|Kim Christensen and Andrea Chang | Times Staff Writers

After Axium International Inc. imploded this week, a company vice president said its Hollywood clients would make a "seamless transition" to other payroll services providers.

But that's not how many of them described it Wednesday after learning that money they had deposited with Axium was tied up by the company's bankruptcy liquidation action filed the day before.

"It's a mess," said writer-producer Jody Savin, who with her writer-director husband, Randall Miller, had "tens of thousands" of dollars frozen in an Axium payroll account for their upcoming feature film, "Bottle Shock."

Still, they consider themselves better off than some other Axium clients who were required to deposit a percentage of payroll amounts to be processed by the Los Angeles company.

"We have a friend who had just wired them $500,000 to do payroll when they went down," Savin said. "For a small movie, that's crippling."

When might Savin and others see their money again?

The short answer is "not in the immediate future," said Howard Ehrenberg, the court-appointed bankruptcy trustee who now oversees Axium's finances.

He said Axium's largest creditor, Golden Tree Asset Management, a New York investment firm, seized $22 million from company accounts that had secured a $140-million loan on which Axium defaulted.

"Those were funds that belonged to all of the customers of Axium as well as Axium's own funds," Ehrenberg said of the seized cash.

Golden Tree declined to comment Wednesday.

Ehrenberg said he was now trying to sell company assets, including a proprietary software program known as RightsMax, to recoup money for creditors. Among the largest, apparently, is the Internal Revenue Service.

"I understand that the IRS is owed tens of millions of dollars in unpaid payroll taxes," he said.

Axium Vice President Jeff Begun told The Times on Tuesday that payrolls the company was processing were being moved to competitors in a "seamless transition" for clients. But studios, other clients and payroll companies disputed that Wednesday.

"Individual productions and individual entities are choosing what service provider to go to in light of what happened," said Ron Cogan, an executive vice president at Burbank-based Entertainment Partners, one of Axium's biggest rivals. "We've been inundated with calls."

Fallout from the company's abrupt closing stung entertainment industry workers suddenly holding worthless paychecks, as well as about 400 Axium employees who were fired.

The bankruptcy also has hit Fortune 500 companies and others that did business with an Axium subsidiary, Ensemble Chimes Global, or ECG, a provider of contract workers and other personnel services. ECG provided or managed more than 2,000 workers for companies not in the entertainment industry.

"This is not just a Hollywood story," said Ron Abell, executive vice president of Managed Staffing, a Texas personnel-staffing company that had $500,000 in funds held by Axium.

Axium shuttered its offices in Los Angeles, Burbank, New York, London, Toronto and Vancouver, Canada, on Monday. An e-mail from an Axium executive in New York at 3:18 p.m. Monday told employees to leave and not come back.

Several said the message caught everyone off guard, including company President Ruben Rodriguez at his Burbank office.

"As soon as that e-mail comes through, Rodriguez says, 'What the hell? Nobody go anywhere' -- and then he locked himself in his office," said Perry Forman, a software developer. "When he came out a half-hour later, he just said, 'Wow, it's over.' "

Neither Rodriguez nor other company executives have responded to interview requests.

Begun, who was not directly involved in the company's operation, said it was his understanding that its problems stemmed from its purchase last year of Chimes Inc. for $80 million in cash. The vendor management and software services firm was combined with another Axium subsidiary to form Ensemble Chimes Global, or ECG.

One ECG client, Chicago-based utility Exelon Corp., said about 450 of its 17,000 employees were contracted through Ensemble. Spokeswoman Jennifer Medley said the company was trying "to continue working with these contractors, and we'll make sure they are paid for their time."

ECG employees were not so fortunate.

Arci Silva-Thomas was working for Axium in Los Angeles when she moved to Troy, Mich., in March for a job with ECG's finance department.

The single mother of three said she was barely making ends meet on her $60,000 salary even before she was fired Monday. Now she's "stranded" in Michigan with no job and little hope for the future.

"I live paycheck to paycheck and I don't get child support," she said. "We didn't get our paycheck today, so I'll be evicted. I'm out here with no family, no money for food, no money for gas to get my kids to school. I don't know what I'm going to do."


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