Lions Gate Films has taken over US distribution duties on Sundance Film Festival competition entry Urbania from Unapix Films Theatrical, signalling increasing concern over the future of the ambitious New York-based Unapix Entertainment, which also yesterday said it has terminated its sale of a 25% stake to German entertainment company H5B5 Media for $4m.

A company representative was unable to comment on speculation that Unapix is in financial trouble.

Urbania, a surreal urban nightmare about a traumatised man inexplicably drawn to a stranger, is directed by Jon Shear. It stars Dan Futterman, Alan Cumming, Matt Keeslar, Lothaire Bluteau and Barbara Sukowa and is screening at next month's Toronto Film Festival.

Earlier this year, Unapix hired Richard Abramowitz, formerly of Stratosphere Entertainment, to head Unapix Films Theatrical as part of an ambitious plan to become a vertically integrated independent studio. Backed by a $40m revolving credit facility GE Capital, the publicly listed company subsequently announced the acquisitions of Urbania and marijuana documentary Grass directed by Ron Mann as well as the deal with H5B5 Media. Grass is the only film released (in June) and has to date grossed $286,819.

Unapix has a library of some 160 titles and has shown particular strength through its video distribution operation A-Pix Entertainment.