As of Monday, S2 has ceased accepting new business as the venerable post house prepares to reorganize under Chapter 11.
Owner Michael Topel told his staff of 35 that editorial work presently in-house will be completed and the transition will be made as smooth as possible for its clients.
“This is not a situation where the doors are closing and the lights are being turned off,” said Topel, “so there’s time to finish the work.
S2, which had been known as Swell for 27 of its 29 years in business, reported gross sales of $5 million in 2005. At its peak, Swell had gross sales of $10 million, employed 135 and sprawled over three elegant floors in the NBC Tower.
Topel decided to reorganize in order to have time “to have a chance to sort things out and see where we want to go, or even if we want to stay in the business as it stands today.
“The business model for which we were configured is now obsolete; it doesn’t match the current business situation,” he said. “If I hadn’t come to this conclusion now, I’d get to the point where we wouldn’t be able to settle in an orderly way.”
Economic factors changed the business
Over the past six years, Topel said he has seen the writing on the wall by the way budgets tightened and margins shrunk.
“I didn’t want to wait to where things got too strained. I’ve got to have enough money to wind things down properly. Since we’re not in a time jam, we don’t have to have a fire sale and liquidate our assets. We’ll take time to see if and how we’re going to proceed,” he stated.
The post house will vacate the space “as soon as the loose ends are tied up, and when our present business has wound down,” he noted.
The near-$1 million-a-year rental on the 23,000-sq. ft. full 18th floor in the Tower was, however, was a factor in the decision to close. The status of the lease will be resolved in the Chapter 11 process.
Topel noted that the landlord had been “tough” in previous negotiations, noting Swell had to pay a hefty cancellation fee the last time the company reduced its rental space.
The inability to negotiate better terms had led to the demise of two other notable postproduction companies in the past. Maggie Magee’s 10-year old Superior Street declared bankruptcy last January and Jack Tohtz’ Skyview shuttered in 2000.
