Madwell, the independent ad agency under significant financial stress with millions of dollars in loan defaults and allegedly rash decision-making by CEO Chris Sojka, has issued furlough notices to some employees. The furloughs affect an estimated 20 to 30 staffers, or roughly 28% of staff, two impacted employees told ADWEEK. 

In an email sent to impacted employees on Wednesday (April 16) at around 7 a.m. ET, HR representative Alyssa Montalvo-Rios said the agency is “initiating a company-wide furlough in order to address recent operational challenges and conduct a necessary internal review.”

Montalvo-Rios added that Madwell’s leadership will assess its options over the next two weeks and will update impacted employees on their “potential reinstatement.”

One impacted employee told ADWEEK they were immediately cut off from all company accounts and communications, including their email and Slack accounts.

“In order to preserve operational viability, we have furloughed a significant number of Madwellians. We continue to affirm our obligations to pay every dollar owed to our employees,” a Madwell spokesperson said in a statement shared with ADWEEK. “Our hope is to continue [sic] so we can provide remuneration to the many small businesses and individuals who are our creditors. This will require cooperation from our largest one. Madwell’s priority continues to be limiting further impact on our people and our clients.”

The news comes just hours after it was reported that Madwell lost one of its largest clients, Verizon, on Friday—a hit that Sojka estimated in an email to staff would cost the company eight figures in annual revenue.  

In recent weeks, the agency’s liquidity problems have come into sharp focus as it has struggled to make payroll on time for multiple consecutive pay cycles. 

Meanwhile, Bank of America quietly filed a request with 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 defaulted loans and post-settlement payments. Should the court grant the request, the bank may have the green light to seize the agency’s assets to help repay the debt.

Sojka, in the meantime, has lashed out at employees seeking answers.