Arlington-based Henninger Media Services Inc. closed its Richmond office last week before filing a reorganization plan to allow the company to emerge from Chapter 11 bankruptcy protection by March.
Henninger blamed the closing on dwindling demand in the area for film and television postproduction services. Officials laid off four of the company's 10 employees in Richmond and transferred one to its Arlington headquarters. One worker quit the firm. The remaining four workers are to be laid off by the end of the month.
The Richmond office's tape-duplication services will be transferred to another Henninger division in Richmond, Commonwealth Film Lab and Transfer, said Henninger founder and chief executive Rob Henninger. The Richmond closing and layoffs will leave Henninger with about 140 employees and three offices.
"The Richmond facility had been a strong contributor, did great work and had a wonderful team," Henninger said. "It was a hard decision."
The office's output waned last fall as demand for its services fell. The division, opened in 1991, was Henninger's first outside the Washington area. The office's remaining employees are working on projects for clients, such as the Virginia Lottery and Circuit City Stores, but that work will end by early next month, the company said.
In the past few years, Henninger has closed and consolidated other offices. The firm plans to move facilities, including three graphic design suites, and about 30 workers to its Arlington office, and editing and audio suites are to be transferred to Henninger's facility on 17th Street in the District, officials said. Most of the transition will be finished by next month. The Georgetown facility's lease will be terminated. A New York division, Henninger Tools, which provided equipment to produce films, was closed in August, and four employees were laid off.
The closings, layoffs and transfers are part of the company's plan to exit bankruptcy. Henninger plans to receive $2 million in revolving credit and a $2 million secured equipment loan from Advisco Capital Corp. in New York, pending court and creditor approval of the company's reorganization plan, filed Wednesday. Henninger hopes to have a Jan. 28 court hearing for the plan's first phase. The rest of the plan could be approved as soon as next month, company officials said. Vienna-based Marcher Consultants helped prepare the plan.
As of Nov. 30, Henninger had assets of $15.6 million and liabilities of $14.5 million, according to documents filed with the U.S. Bankruptcy Court. The company reported sales of $850,000 in November.
Two recently laid-off Henninger employees in Richmond, Bob Thagard and Todd Hervey, this month started a postproduction shop, Fuel Creative Inc., that will open in Richmond's Shockoe District. Thagard and Hervey plan to buy about $100,000 worth of Henninger equipment, including a technology program, called the Flame, used to create special effects. They learned on Dec. 31 that their office was closing.
Thagard said the company's size and high overhead costs in Richmond contributed to its failure.
"We were all waiting for it to happen, [but] we didn't want it to," Thagard said. "It's not that the service is not needed here. Our company couldn't exist on that high overhead."
Other Richmond postproduction firms have also scaled back, but Thagard and Hervey hope their company's small size will help it weather the economic downturn.
The market is "not big enough to support a facility the size of Henninger," Hervey said. "What we're trying to do is be a smaller, leaner and meaner shop."