UPDATED: Fandor, the independent-film streaming service, has laid off nearly all of its employees and transferred its assets to a new entity that’s seeking a buyer, Variety has learned.

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.