Southern California rock indie Drive-Thru Records has a distribution deal via Sanctuary Records through early 2008, but with the latter drastically trimming its U.S. label operations in coming months, Drive-Thru is investigating a way out, says label co-founder Stefanie Reines.

"We are definitely not happy," Reines says. "If our team is not there, there's no reason for us to be there."

As previously reported, British independent music company Sanctuary Group Plc will wind down its U.S. label's front-line efforts this summer, but will continue to run a catalog operation, according to a source within the company. U.K. execs arrived in New York last Thursday (March 29) and alerted staffers the label would be cutting operations by June 30, according to one source at the U.S. label.

Drive-Thru and RED-distributed Sanctuary had a hit in 2006 with pop act Hellogoodbye. The band's "Zombies! Aliens! Vampires! Dinosaurs!" has sold 322,000 units in the U.S., according to Nielsen SoundScan.

Reines says Sanctuary was a "giant help" in breaking the act, and she notes Drive-Thru's deal with Sanctuary requires the U.K. company to help Drive-Thru with promotion and marketing on its releases. Reines says she's been informed that the staff at Sanctuary she works with on a daily basis will be let go by September.

"Quite frankly, they're not fulfilling their end of the contract, which includes providing certain services for us," she says. "But why would we stay with a company that doesn't exist anymore? It doesn't make any sense for us or our bands, and it doesn't make any sense for them. We're obviously looking to make a move."