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ECG bankruptcy continues, some fees remain

February 25 2009

Bankruptcy proceedings continue in the case of Ensemble Chimes Global. At one time the largest vendor management system, the firm filed for bankruptcy in January 2008. The move came just after its parent company, Axium International Inc., a provider of payroll services to the entertainment industry, did the same.

Bankruptcy trustee Howard Ehrenberg said Monday he continues to work with ECG's customers (the staffing buyers) to collect unpaid management fees.

"I've been actively collecting the management fees and most of the customers have cooperated by paying or providing the data requested," Ehrenberg said, adding he will take action against those customers who aren't cooperating. If the customers don't pay, staffing firms could be on the hook. "I'm still hopeful I won't have to go to any of the staffing vendors based on the judge's order from last year."

Some $3 million in fees have been collected so far, but without data from the customers, it's difficult to tell how much might be owed, Ehrenberg said. The number of customers who have not cooperated is small.

Presently, there are insufficient funds to pay any dividend to Axium creditors, Ehrenberg said.

Axium owed $42 million to staffing firms when it filed for bankruptcy, according to previous reports.

Claims have been filed with Axium's insurance carrier, Ehrenberg said. And a lawsuit has also been filed against BDO Seidman, Axium's auditor, alleging gross negligence in its failure to discover unpaid payroll taxes relating to Axium's entertainment industry payroll business. The Internal Revenue Service has an $80 million claim against Axium.

It's also likely Axium's Chairman and CEO John Visconti and Vice Chairman and COO Ronald Garber will be sued, Ehrenberg said. However, it's probable there may be a resolution with GoldenTree Asset Management, Axium's lender.

GoldenTree transferred $22.5 million from Axium's bank account just prior to the bankruptcy. According to a lawsuit against Visconti and Garber by GoldenTree, the two operators of Axium lived lavish lifestyles paying $462,000 a year to lease luxury cars such as a Rolls Royce and received weekly payments of $8,000 in cash delivered by armored car in addition to their salaries.


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