How The Bankruptcy And Potential Sale Of The Weinstein Company Affects Victims | Weinstein | FRONT LINE | PBS
Seven months after the first women came forward with allegations of sexual harassment and assault against Hollywood mogul Harvey Weinstein, a court earlier this month approved the sale of The Weinstein Company, the film studio Weinstein co-founded with his brother in 2005.
The besieged studio, which is deep in debt and faced with a range of court case, has been in turmoil since October, when dozens of women went public with accusations of sexual misconduct against its co-founder dating back decades. To date, more than 100 women have made allegations. Now, the circumstances under which the sale of the studio was approved may create new hurdles for alleged victims seeking compensation from the Weinstein Company.
As for the list of creditors and others demanding money from the company, alleged victims “don’t come all the way down, but they’re all down,” Adam Levitin, a Georgetown law professor who specializes in bankruptcy , said FRONTLINE.
Victims weren’t always so low on the list. In February, a group of investors led by Maria Contreras-Sweet, a former Obama administration official, and backed by billionaire Ron Burkle and Lantern Capital, made a $500 million investment offer for Weinstein Company assets. The group’s offer would have included a settlement fund for victims of $20 to $30 million.
Then, just as the deal was being finalized, the office of New York Attorney General Eric Schneiderman deposit a civil lawsuit against the Weinstein Company on February 11. The lawsuit alleged that the Weinstein company’s executives and board of directors repeatedly failed to take steps to protect employees from Weinstein’s behavior. The office too weighed on the sale, objecting to company leadership, harassment policies – and the small size of the victim compensation fund.
In an attempt to salvage the offer, the Weinstein company fired its chief operating officer, David Glasser. Potential buyers also met with Schneiderman and discussed plans to create a victim compensation fund of up to $90 million, according to The New York Times. In the end, the agreement collapsed early March.
On March 19, the Weinstein Company filed a request bankruptcy protection, which has blocked all ongoing lawsuits against him. He also said that anyone “who has experienced or witnessed any form of sexual misconduct by Harvey Weinstein” would be released from all non-disclosure agreements they signed, promising not to discuss what had happened.
But the bankruptcy also means that the women who sued the company would join the end of a long line of people and entities waiting for compensation. The first would be the financial institutions that lent money to the Weinstein company. “The bankruptcy court really has no latitude to consider that there is a particularly sympathetic class of victims,” Levitin said.
Weinstein has denied any non-consensual sexual conduct and, through a spokeswoman, told FRONTLINE that he deeply apologizes to those offended by his behavior. The company’s board has previously said it had no knowledge of Weinstein’s alleged misconduct.
On May 8, a Delaware bankruptcy court approved selling Weinstein’s company assets to Lantern Capital, a Texas-based private equity firm, for $310 million in cash, and assuming $115 million in debt. Approval of the deal was already underway when, in a surreal twist, Schneiderman himself resigned on May 8 after a report the new yorker that he physically assaulted four women who had romantic relationships or dates with him.
The New York Attorney General’s office has since said his lawsuit against Weinstein is still ongoing and the investigation is ongoing. “From the beginning, including throughout the bankruptcy process, we have actively fought to ensure that victims are compensated, employees are protected and wrongdoers are not rewarded,” said Amy Spitalnick, press officer for the attorney general’s office.
The new agreement – which has not yet been formally concluded – does not currently include a victim compensation fund. The money from the sale will be used to repay amounts owed by the Weinstein company. Depending on the amount available and how much the Weinstein company owes its creditors, there may not be enough left for all of Weinstein’s alleged victims after everyone else has been paid. However, negotiations are yet to come. A person familiar with the talks said women’s voices were being considered.
Lantern Capital declined to comment on the filing.
Victims may also have other options. The bankruptcy of the company does not exempt Harvey Weinstein, other persons or entities from any responsibility in this matter. The Weinstein company – as well as its top executives – have some assurance that could provide some relief.
“The bankruptcy affects only one defendant – the Weinstein Company,” Cris Armenta, one of the plaintiffs’ attorneys in a class action lawsuit against the company, told FRONTLINE. “Our plan and our hope is that there will be… sufficient compensation for our customers at the end of the day.”
— Nick Verbitsky contributed reporting.