Two weeks ago, the embattled Weinstein Company looked like the idea had finally found a way forward.
An investor group had emerged having a plan to buy 0 percent of the studio’s assets, including rights to “Project Runway” as well as a 277-film library. The brand new company would likely be primarily led by women.
For the Weinstein Company, crippled in wake of sexual misconduct allegations against its co-owner Harvey Weinstein, the offer was the only way to keep the studio intact as well as its 150 employees working. various other potential buyers only wanted to cherry-pick properties, as well as the studio was nearly out of money to keep running.
nevertheless the Weinstein Company’s board — or at least the three men remaining on the idea — said late Sunday in which the sale talks, which had been teetering since a lawsuit had been filed This specific month by the brand new York State attorney general, had fallen apart. By Monday, finger-pointing over who was to blame had begun. as well as the studio’s future seemed to be a court-directed sale or liquidation, with assets sold off in bankruptcy proceedings like scrap via a wrecked car.
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“There’s nothing pretty about This specific,” said Larry Hutcher, a corporate lawyer at Davidoff Hutcher & Citron in brand new York who has been following the Weinstein Company’s struggles. “the idea’s likely going to be a free-for-all in which stretches on for months.”
Since October, when the Weinstein Company began to implode after reports inside the brand new York Times as well as The brand new Yorker revealed decades of sexual harassment allegations against Mr. Weinstein, very little has gone as expected. At one point, two female-led investor groups were competing to buy the assets, with one intending to give profits to organizations focused on ending harassment, sexual abuse as well as discrimination.
So there is usually always the possibility of another twist. The Weinstein Company has yet to file for bankruptcy — the idea said on Sunday in which a filing would likely happen “over the coming days” — leaving open the possibility, however unlikely, in which the two sides could come to an agreement.
Before the deal fell apart, the investor group had offered to pay roughly $275 million for the Weinstein Company, plus the assumption of $225 million in debt. Leading the effort was Maria Contreras-Sweet, who ran the little Business Administration under President Barack Obama. Backers included Ron Burkle, the billionaire investor, as well as Lantern Capital, a Texas private equity firm.
“the idea appears in which This specific transaction has today ended,” Ms. Contreras-Sweet said in a statement on Monday, adding in which the Weinstein Company’s move had “surprised” her. “While our efforts did not materialize as we had hoped, I am grateful for my investors who saw the compelling value of a women-led board.”
The Weinstein Company declined to comment. In announcing its bankruptcy plans on Sunday, the company’s board said in a statement, “While we recognize in which This specific is usually an extremely unfortunate outcome for our employees, our creditors as well as any victims, the board has no choice.” The studio also made public a sharply worded letter in which the idea sent to Ms. Contreras-Sweet as well as Mr. Burkle on Sunday in which blamed her for failing to “keep your promises” about interim funding.
the idea was in November when Ms. Contreras-Sweet first sent a letter to the board outlining her proposal. “I will be chairwoman of a majority-female board of directors,” she wrote. “Women will be significant investors inside the brand new company as well as control its voting stock.” She also proposed creating a fund for victims as well as establishing a mediation process for reaching settlements.
After failing to find various other buyers who would likely keep the studio intact — Lionsgate, Shamrock Capital Advisors, Killer Content as well as the Qatari company beIN Media Group were among those considering various pieces — the board entered into exclusive negotiations with Ms. Contreras-Sweet’s group in late January.
Most of the studio’s all-male board had quit in early October. Those who remained were Mr. Weinstein’s younger brother, Bob Weinstein; Tarak Ben Ammar, a Franco-Tunisian financier as well as film producer; as well as Lance Maerov, an executive at the advertising giant WPP Group.
By Feb. 10, a Saturday, the two sides were finalizing a deal. The Weinstein brothers, who jointly own about 42 percent of the company, would likely receive no cash via the sale. various other equity holders would likely also be wiped out. Bob Weinstein, who had been running the studio since the firing of Harvey Weinstein in October, would likely step down. According to two people briefed on the talks, who spoke on the condition of anonymity to discuss a private process, the Weinstein Company as well as Ms. Contreras-Sweet’s group were set to formalize the agreement in which coming Monday.
Then came a curveball.
In a phone call on the evening of Feb. 10, two lawyers who work for Eric T. Schneiderman, brand new York’s attorney general, told Ms. Contreras-Sweet in which they had reviewed the proposed deal as well as wanted to discuss three major concerns, according to the people briefed on the talks. Those were adequate compensation for victims, protections for the studio’s remaining employees as well as no financial rewards for studio executives who enabled or perpetuated Mr. Weinstein’s misconduct. (Mr. Weinstein has denied ever engaging in “non-consensual sex.”)
Ms. Contreras-Sweet said she believed the proposal addressed those points, nevertheless declined to have a substantive conversation.
On Sunday, Feb. 11, Mr. Schneiderman, frustrated by a continued lack of responsiveness via the investor group to his queries, filed a lawsuit against the studio as well as the Weinstein brothers alleging in which they repeatedly violated state as well as city laws barring gender discrimination, sexual harassment as well as coercion. as well as he held a news conference the next morning in which he publicly stated his three requirements for a deal. “As of yesterday, there was no deal in which would likely have met these standards,” he said. In particular, he said, “there was no victim compensation fund.”
By the end of in which week, Mr. Schneiderman had started out to get what he wanted. The Weinstein Company, for instance, fired its president, David Glasser, on Feb. 16. Mr. Glasser had been likely to run the brand new studio; Mr. Schneiderman had pointed to him among the managers who perpetuated Mr. Weinstein’s behavior. Ms. Contreras-Sweet as well as Mr. Burkle also met with Mr. Schneiderman as well as discussed plans to create a full-fledged victim compensation fund, ultimately earmarking up to $0 million.
nevertheless the Weinstein Company emailed a letter to the investor group on Sunday saying the deal was dead.
“Over the past two weeks, we had very productive discussions with both parties,” Eric Soufer, Mr. Schneiderman’s director of communications as well as senior counsel, said in a statement on Monday. “We are disappointed in which despite a clear path forward on those issues — including the buyer’s commitment to dedicate up to $0 million to victim compensation as well as implement gold-plated H.R. policies — the parties were unable to resolve their financial differences.”
Mr. Soufer added, “We will continue to pursue justice for victims inside the event of the company’s bankruptcy.”
Bankruptcy would likely push the pause button on the many lawsuits, some of which predate the harassment revelations, in which are pending against the company. “Think of the idea like musical chairs,” said Jack Tracy, head of legal analysis for Debtwire, a distressed debt research firm. “The music stops as well as then a judge puts everyone in their chairs one by one.” (Lawsuits can continue against Mr. Weinstein personally unless he makes his own bankruptcy filing.)
The Weinstein Company could pursue a Chapter 7 filing, which involves the appointment of an independent trustee to run a liquidation. Filing for Chapter 11 is usually perhaps more likely, because the idea would likely allow the studio more control over the sale of assets.
“The important thing inside the case of This specific particular company,” Mr. Tracy said, “is usually in which bankruptcy allows assets to be sold free of liability.”