Company Layoffs as Financial Struggles Intensify for Madwell
Facing the Grind: An Unraveling of Madwell's Financial Fiasco
Madwell, the indie ad agency on the brink, grappling with millions in loan defaults and questionable leadership decisions from CEO Chris Sojka, has served furlough notices to a substantial chunk of its staff. Roughly 20 to 30 employees, making up a whopping 28% of the workforce, have been affected as per two insiders speaking to ADWEEK.
Listen to ADWEEK's Juicy Chat with Chris SojkaIn an early-morning email blast on April 16, HR representative Alyssa Montalvo-Rios revealed that Madwell was initiating a company-wide furlough to tackle recent operational hurdles and embark on a necessary internal review. The update promised a review of options over the subsequent fortnight, with workers on the chopping block receiving updates on potential reinstatement.
An affected employee confessed to ADWEEK, having been instantly locked out of all company accounts, including email and Slack channels, post-furlough notice.
A Madwell spokesperson spoke to the press, stating, "We've furloughed a substantial number of Madwellians to preserve operational viability. We remain steadfast in our commitment to honor every dollar due to our employees, with the aim of paying remuneration to our creditors, large and small."
Madwell's Madhattan Tales: A $17.5M Private Jet, a $1M Launch Bash, and Adderall - The ConnectorThe news surfaced merely hours after reports indicated that Madwell had lost one of its largest clients, Verizon. This loss, according to Sojka's email to the team, could slice through millions in annual revenue.
More recently, Madwell's liquidity crisis has become glaringly apparent, with the agency grappling to meet payroll deadlines for consecutive pay cycles. The ongoing struggle has escalated to alarming proportions, reaching courtrooms and Bank of America's doors.
Bank of America, in a secretive move, petitioned a U.S. district court in New York, seeking a judgment against Madwell and other entities owned by Sojka to recover over $4 million in overdue loans and post-settlement payments. If the court approves this request, the bank could potentially seize Madwell's assets to offset the debt.
Meanwhile, Sojka's reaction to employee inquiries has been less than cordial.
Enrichment Data:
- Loan defaults and asset seizure: Bank of America's request for a judgment against Madwell aims to recover over $4 million in loan defaults and additional payments[2].
- Operational challenges:
- Furloughs: Approximately 20–30 employees (~23–28% of staff) were furloughed in mid-April to tackle operational issues, with management stressing the need for an "internal review"[1][4].
- Client loss: Verizon, a key client accounting for "8 figures" in annual revenue, ended its partnership with Madwell, intensifying the agency's cash flow concerns[3][4].
- Payment failures: The agency has repeatedly missed payroll, vendor payments, and rent, worsening its financial predicament[2][4].
- Legal and creditor actions:
- New York Times lawsuit: The publisher is suing Madwell for an unpaid invoice amounting to $37,176.38[2].
- Employee and vendor fallout: Staff describing abrupt account deactivation post-furlough, while vendors and creditors remain unpaid[1][2].
- Madwell's financial crisis has led to loan defaults, with Bank of America seeking a judgment against Madwell and other Sojka-owned entities to recover over $4 million in overdue loans and post-settlement payments.
- The agency's operational challenges have resulted in a company-wide furlough, affecting an estimated 20 to 30 employees (around 28% of the workforce), as per two insiders speaking to ADWEEK.
- Post-furlough, affected employees have found themselves instantly locked out of all company accounts, including email and Slack channels.
- Madwell's liquidity crisis has escalated, with the agency struggling to meet payroll deadlines for consecutive pay cycles. This has caused concern, reaching courtrooms and Bank of America's doors.
- No longer accounting for "8 figures" in annual revenue, Madwell has lost one of its largest clients, Verizon.
- Facing questions from employees, Sojka's reaction has been less than cordial.
- The ongoing financial predicament has led to staff describing abrupt account deactivation post-furlough, while vendors and creditors remain unpaid, and The New York Times has sued Madwell for an unpaid invoice of $37,176.38.
