Richard Fleischer, in his book Out of the Inkwell (2005), outlines the life of Red Seal. Here are the pertinent paragraphs (note Ray Pointer’s clarification in the comments).
Taking a page from his former employer J. R. Bray's book, Max put the studio into high gear when, in 1923, he formed his own distribution company, Red Seal Pictures, with the plan to make all sorts of films other than cartoons. He hired Edwin Miles Fadiman, who was experienced in the distribution field, to run the company and committed to an ambitious release schedule of 120 short subjects.No one seems to know where Alfred Weiss came from, but in November 1926, shortly after Max asked for the appointment of a receiver in bankruptcy, Weiss crawled out of the woodwork and offered to take over Red Seal and Inkwell, pay their bills, and put them back in business. He seemed heaven-sent. He wasn't. He was, however, the only wheel in town, and Max felt that he had to go for it. Weiss became the president of both Red Seal and Inkwell. Max was hired on as vice-president and Dave as art director at salaries of two hundred dollars a week each with scheduled increases up to three hundred dollars per week.
Things started out well for Red Seal Pictures, and it looked like Max and Fadiman had a successful operation going. By 1925, Red Seal was releasing Out of the Inkwell cartoons, Song Car-Tunes, a new cartoon series called Inkwell Imps featuring Ko-Ko and his dog Fitz, and various live-action featurettes. One of the main called Carrie of the Chorus, a two-reel “backstage” showbiz comedy. My sister, Ruth, played the sidekick to the leading character, Carrie, and Ray Bolger played the male lead.
In 1924, Red Seal released twenty-six films. In 1925, it released 141 shorts. It wasn't too long, however, before Max and Fadiman realized that they were going to be hard put to continue to meet the production schedule to which they were committed. So Max took another page from J. R. Bray's book. Unfortunately, it was the wrong page: Red Seal began buying already-made films from small companies and releasing them under its own banner. These films didn't perform as hoped. It seems like the more Red Seal bought, the more it lost.
Problems started to crop up in the company: overhead expenses climbed to an unrealistic level; major disagreements arose with Fadiman, who finally quit. By 1926, Red Seal and Out of the Inkwell Films were broke. They couldn't pay their bills, and the film laboratory that processed their films refused to release their negatives until they were paid.
On the basis of Max's name and reputation, Weiss wangled a distribution contract out of Paramount Pictures. The Red Seal company was abandoned. Weiss changed the name of Out of the Inkwell Films to “Inkwell Studios” and took the grand screen credit “PRESENTED BY” for himself. Finally, he changed the well-established Out of the Inkwell series name to Inkwell Imps. The studio started releasing Inkwell Imps and Song Car-Tunes through Paramount.
To cut a long and depressing story short, Max and Dave found it impossible to work for Weiss and quit the company. Shortly after they resigned, Weiss declared bankruptcy and disappeared.
Weiss’ involvement in movies pre-dated World War One. During the war he had been the New York distributor of Triangle Films before forming ArtClass Pictures Corp. with his brothers. After the Red Seal fiasco (during which time he was president of Agfa Raw Film Stock), he jumped over to Fort Lee where he was president of Metropolitan Studios, Inc.
Dick Huemer is quoted by Donald Crafton in the book Before Mickey that Red Seal had between six and ten animators, including Doc Crandall and Burt Gillett. It was here Art Davis became Huemer’s in-betweener when Huemer went into animation. What Huemer didn’t mention (or perhaps it was left out by Crafton) is this interesting tidbit from The Film Daily of September 2, 1925:
Beth Brown, Editor of Inkwell
Beth Brown has been appointed editor-in-chief of the Out-of-the-Inkwell Studios and Red Seal Prod. and will assist Max Fleischer in writing scenarios.
The Fleischer studio is conceded to have had the first female animator (see Ray Pointer’s note in the comments) but it appears the progressive Max also hired the first female cartoon writer.