Reached for comment, Fandor CEO/chairman Chris Kelly sent a statement in which he said Fandor has a deal in place that will let a “new entity” continue to operate the service.

According to a statement sent to Variety by Seth Freeman, senior managing director of GlassRatner Advisory & Capital Group, the assets of Our Film Festival Inc. — the corporate entity that had been doing business as Fandor — have been acquired by a newly incorporated entity, Fandor ABC LLC. Fandor ABC LLC is managed by the San Francisco office of GlassRatner, a turnaround management and restructuring firm that is a unit of B. Riley Financial. “The Fandor.com site will continue streaming movies without interruptions. It is not out of business or going out of business,” Freeman’s statement said. “During the transition period, some previous Our Film Festival Inc. employees are being retained and advising Fandor ABC LLC, including former CEO Chris Kelly. Fandor ABC LLC welcomes new partnerships and/or strategic transactions.”

“We have completed a transaction that allows a new entity to seek to continue the service under different management,” Kelly’s statement said. “This is of course a disappointing outcome for all who have contributed to and embraced our mission to date. We continue to hope that the prospect of reaching diverse audiences with great visual storytelling will inspire creators everywhere.”

“Fandor has prided itself on providing access to great film and visual expression to a broad audience. While we have had notable successes, the business challenges of the space we have operated in are immense,” Kelly said in the statement.

According to sources, Kelly — who had been Fandor’s principal investor– on Wednesday (Dec. 5) informed Fandor’s staff that a round of financing the company had been trying to secure to keep the doors open had fallen through. As a result, all of Fandor’s employees, about 40 people, were let go.

“There were cutbacks before Thanksgiving but nobody was expecting this,” a source told Variety.

According to this source, Fandor fired the entire staff and the company hired back a few employees on an hourly basis to keep the company functioning as it hopes to avoid a total shutdown.

Fandor’s streaming service has offered a selection of 4,000 independent films, international movies, documentaries and classic movies starting at $5.99 per month. Fandor had been planning a relaunch of the service in January 2019 with refreshed apps, along with a new lineup of international and independent TV shows as well as expanded editorial content.

The Fandor layoffs come after WarnerMedia’s FilmStruck closed down, effective Nov. 29, with the company saying it had been “largely a niche service” and indicating WarnerMedia would pour its resources into a new, broader subscription VOD service launching in 2019.

In what turns out to have been an untimely move, Fandor had launched a special discount offer targeted at FilmStruck customers. Last month, Criterion Collection, which had an exclusive distribution deal with FilmStruck, announced plans to roll out a direct-to-consumer streaming service.

Kelly, who previously was Facebook’s first general counsel and chief privacy officer, originally invested in Fandor in 2011. He also is part owner of the Sacramento Kings.

Kelly took over the CEO role in October after the departure of Larry Aidem, who left Fandor after more than three years as CEO to join tech investment and consulting firm Reverb Advisors.

The two companies announced a “limited time offer” which includes both a MoviePass and Fandor subscription for less than $116 per year.

However, some users were confused about the new pricing plan worked.

Like MoviePass says, the deal will lower the MoviePass subscription down to $7.95 per month from its usual $9.95 per month. But the full annual fee has to be paid upfront, not monthly.

The company hasn’t decided how long before this offer expires, but it’s not the first time that MoviePass has tried a bundle. The same offer was originally tested back in November 2017, and was well-received, says MoviePass.

The Fandor subscription includes access to a collection of over 5,000 independent films, documentaries, classics, international features and shorts.

The deal arrives at time when MoviePass’ business model is being increasingly scrutinized. The company claims its users now drive more than 5 percent of the total box office and is continuing to grow its user base. But MoviePass is subsidizing the cost of those tickets for now, while betting on the fact that it will be able to monetize in other ways.

For example, it aims to make money from studios who want to target its customers with their marketing efforts, or access user data to learn about trends; it’s taking a cut of ticket sales and concessions at some theaters; it has begun to acquire movies; and it hopes that eventually, users will slow down their movie-going to their usual once per month (or less), after the initial rush of having an all-you-can-watch subscription wears off.

Not all theater chains are thrilled with MoviePass, however. MoviePass recently pulled out of several high-traffic AMC locations as the chain refused to negotiate on a rev-share deal.

“We already know in past testing that MoviePass subscribers are not theater-loyal; they’re happy to drive by a theater that may be closer to a theater that will accept MoviePass -because of the MoviePass value,” MoviePass majority owner HMNY’s CEO and Chairman Ted Farnsworth said, threatening AMC.

The company has also more recently faced issues with customers using the pass to offset the cost of IMAX or Fathom Events movies, which is prohibited; or were buying tickets that they exchanged for gift cards. MoviePass canceled these users subscriptions, it said. Meanwhile, some users claimed they were seeing too many movies, which is why they were kicked off.

Subscribers who sign up for the new Fandor offer will be billed $115.35 ($7.95 a month plus a sizable $19.95 processing fee); They will then receive one full year of MoviePass and one full year of unlimited streaming from Fandor.

Fandor�s core subscription VOD service, starting at $7.50 per month, offers a selection of 8,000 titles from around the world. In addition, the company � whose investors include Starz � has stepped up production of original content distributed on Facebook and Verizon�s Go90 service. Fandor�s February series of video essays on �Who Should Win?� for this year�s Academy Awards, under its Keyframe content division, generated more than 11 million unique viewers on those platforms, three times the previous month, according to CEO Larry Aidem.

�The line extension of the Fandor brand beyond its proprietary website and the movies themselves into social media through commentary, discussion and essays should endear it to the large community of film-lovers,� Steve Katelman, exec VP of global media partnerships at Omnicom Media Group, said in a statement. �OMG looks forward to developing distinctive opportunities for like-minded clients.�

To lead Fandor�s foray into branded content, Aidem has hired Scott Travis, a veteran AOL and SiriusXM sales executive, as chief revenue and partnership officer. �Scott�s experience at AOL and the premium environment that is XM Radio is perfectly suited to the premium film-lover space that Fandor occupies,� said Aidem, the former Sundance Channel boss who joined the company last year.

In addition, the company announced that Courtney Spence, founder of multimedia marketing firm CSpence Group, has joined as senior marketing adviser.

Fandor recently reached a deal with a large OTT distributor to launch later in 2016, Aidem said, declining to identify the partner. That, coupled with its direct subscriber base and existing syndication pacts with Verizon Go90, Vessel and HP, will expand Fandor�s viewer base to more than 5 million by the end of the year.

�We�re absolutely a subscription service � that�s still the origin of the brand,� Aidem said. �But that too is evolving from an a la carte model to where we are going to be more aggressively bundled with other services,� like a basic cable network.

In November, Fandor announced $7 million in funding from Starz and other investors. The San Francisco-based company�s principal investor is Chris Kelly, who was Facebook�s first general counsel.

�Starz looks forward to joining with Fandor in the upcoming months to provide broader selection and value to the OTT consumer within this rapidly expanding OTT marketplace,� Michael Thornton, chief revenue officer of Starz, said in a statement.