By Jack Egan
With a winning bid of $7.03 million, Entertainment Partners, Hollywood’s leading payroll services company, acquired select assets of now defunct Axium Interntional at a court-supervised auction on January 31. Axium, a leading competitor of EP, filed for Chapter 7 bankruptcy liquidation a month ago, leaving some client firms and an untold number of workers in the lurch with funds frozen or holding worthless paychecks.
The purchase by Burbank-based and employee-owned EP should help sort out some of the mess left by Axium’s going out of business, but it may not do much to resolve any pending claims, since EP did not assume any of Axium’s liabilities, estimated to be in the hundreds of millions of dollars. Adjudication of claims and who has precedence will await further bankruptcy court proceedings.
According to a multimillion dollar suit filed by Axium’s biggest creditor, New York hedge fund GoldenTree Asset Management, the firm’s failure was the result of “massive fraud, theft, self-dealing and the looting of assets of the now-bankrupt company.”
“Our number-one goal is to keep [Axium’s] clients going,” declared EP president and CEO Markham I. Goldstein after the auction. “There’s a lot of anxious people out there.”
But in a statement issued later he added: “In the interests of preserving the integrity of the historical and current data for our clients and the industry, we have purchased certain of the assets and assumed none of the liabilities of Axium International through the bankruptcy proceedings.” Included in the acquisition are “significant software assets.”
The lion’s share of below-the-line crew and other workers who received payroll checks through Axium but had studios or production companies as their official “primary” employers should be made whole for checks that have bounced or haven’t arrived. Only where Axium itself served as primary employer are workers going to have to wait for the bankruptcy proceedings to learn if there’s anything left to make good on what they’re owed. IATSE has hired an attorney to represent guild members in the proceeding.
Howard Ehrenberg, an attorney with SulmeyerKopetz, who is the court-appointed bankruptcy trustee, will be responsible for generating W2 tax forms for 2007 that Axium should have sent out to workers but didn’t, and also for “responding to requests for confidential data.”
A group headed by Ruben Rodriguez, the former president of Axium who was caught unawares when the firm suddenly folded, started the assets auction with a $2.5 million bid. It was ultimately topped by Entertainment Partners’ $7 million high offer. Ehrenberg said he was satisfied by “the spirited bidding” and expressed optimism that the auction “will result in a significant benefit to the creditors of the bankruptcy estate.”
Written by Jack Egan