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Troubled independent distributor Alchemy has pink-slipped about 40 employees — about 40% of its staff — on the heels of a disappointing performance by its slate of films.

“Alchemy’s new management team has uncovered some challenges within parts of its businesses,” a spokesperson said. “As a result, we are working tirelessly and, more importantly, we are committed to fixing each and every situation that we are faced with in order to re-emerge with renewed commitments and even stronger alliances.”

The layoffs at the Los Angeles-based company were announced during the Berlin Film Festival, where A24 reached an agreement to take over distribution of the Colin Farrell comedy “The Lobster.” Alchemy had acquired the rights to the surrealist film, which also stars Rachel Weisz and Lea Seydoux, during the Cannes Film Festival last May.

The Lobster” had been set for a March 11 release but an informed source said that Alchemy execs notified filmmakers a week ago that they had cash flow issues and would not be able to meet their contractual commitments for several films, including “The Lobster.”

The company, formerly known as Millennium Entertainment, relaunched itself as Alchemy in January 2015 and was an aggressive buyer at film festivals. It announced in July that it had acquired ANconnect and Anderson Digital and formed a strategic alliance with ARC Entertainment to act as aggregator for WalMart, Target, Best Buy and Sam’s Club with 50 new content partners, including Bagdasarian Productions and DreamWorks Animation’s nontheatrical and classics divisions.

In December, CEO Bill Lee stepped down and the company promoted Kelly Summers and Scott Guthrie to the posts of co-presidents.

“Our commitment at Alchemy is to our stakeholders and partners within the retail and filmmaking communities,” the spokesperson said. “As innovators in distribution, Alchemy has strived to strengthen its alliances and capabilities through the acquisition of several businesses over the past year. While vastly expanding our ability to service our partners, Alchemy has had to conduct extensive internal reviews to address redundancies and duplication created by the mergers. As a result, we have made the difficult decision to reduce staff as necessary to improve efficiencies and ensure sustainable market leadership.”

Alchemy’s best domestic box performer has been “Meet the Patels” with $1.7 million. Kristen Wiig’s “Welcome to Me” took in only $609,000 in the U.S., and Gaspar Noe’s sex-infused “Love” grossed just $249,000. “Madame Bovary,” starring Mia Wasikowska, managed only $44,000 in the U.S.

Alchemy still has Italian director Nanni Moretti’s dramedy “Mia Madre” on its schedule with a March 25 debut along with Rob Zombie’s horror vehicle “31.”

The news about the layoffs was first reported by Deadline Hollywood.

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