Major Update: Weinstein Company Officially Files for Bankruptcy After Harvey Weinstein Accusations
Five months after dozens of women came forward with sexual harassment and assault allegations against producer Harvey Weinstein, The Weinstein Company has filed for bankruptcy.
The film studio was already struggling prior to the October revelations from The New York Times and The New Yorker. But in the months following the scandal, there were ongoing discussions of a buyout or an acquisition deal. Those all ended up falling through, and in early March, the bankruptcy became official.
The Weinstein Company filing for bankruptcy is a huge moment in film history. But it also has significant implications for the women who have accused Weinstein of abuse. Here’s what happened with The Weinstein Company this week, how we got here, and what it all means.
1. Following the allegations, Bob Weinstein struggled to save the company
Harvey Weinstein was fired from The Weinstein Company shortly following the allegations against him in October. However, his brother, Bob Weinstein, remained the head of the studio. And so after the allegations came out, he desperately tried to save the company, which had already been struggling.
In October, The Weinstein Company entered talks with Colony Capital, a private equity firm, to receive a cash infusion. However, this deal ended up falling through, as reported by The New York Times.
After that, Bob Weinstein continued to talk with interested buyers, including Viacom and Lionsgate, according to Deadline. But at this point, the studio’s future was unclear, and industry insiders felt that they would probably have to file for bankruptcy.
Next: This factor complicated any possible deal.
2. The company had a debt load of about $500 million as of November
In November, as Bob Weinstein continued to search for financial assistance, Variety reported on just how much debt the studio was carrying.
According to the report, The Weinstein Company as of November had a debt load of about $520 million. This included about $50 million in corporate debt and $100 million that the company owes to talent.
So although Bob Weinstein was insisting that the studio did not plan to file for bankruptcy, things did not look great for them.
Next: This turn of events surprised industry insiders.
3. In early 2018, a deal came together with a group of investors
Surprisingly, in January, it seemed that The Weinstein Company had found some investors.
Deadline reported that a group led by Maria Contreras-Sweet was in negotiations to buy the company. A new company, which would have a board led by women, was to acquire the studio’s assets, with Yucaipa Enterprises and Lantern Capital being minority partners. Under this deal, Bob Weinstein would leave.
According to Deadline, there were other bids, but this $500 million acquisition was the only one that assumed all liabilities. At the time of this report, the deal was still about a week or more from being finalized. But it seemed like things had turned around and The Weinstein Company might avoid bankruptcy.
Next: The deal suddenly fell apart for this reason.
4. That deal collapsed following a lawsuit by the New York attorney general
Things changed in February when New York Attorney General Eric Schneiderman filed a lawsuit against The Weinstein Company, saying that Bob Weinstein and the board were complicit in Harvey Weinstein’s actions and that they violated city and state laws.
At the time, Schneiderman also objected to this imminent acquisition. He said that it was unacceptable for the new owners of the Weinstein Company to maintain the same management team as the old studio, especially David Glasser, the former Weinstein Company COO who was to become CEO but who Schneiderman said had not properly handled the complaints against Harvey Weinstein. He also expressed concern that this sale would “leave victims without adequate redress, including a lack of a sufficient victims compensation fund.”
In late February, The Weinstein Company announced that they would file for bankruptcy as the deal with the group of investors had collapsed. But surprisingly, a few days later, the investor group announced that the deal was back on and about to be finalized. Then, on March 6, the group said that they had called off the deal, reportedly after discovering The Weinstein Company had even more debt than they thought.
Next: The big step the company just recently took.
5. The company officially filed for Chapter 11 bankruptcy on March 19
A few weeks later, the Weinstein Company finally, officially filed for bankruptcy.
The studio filed for filed for Chapter 11 bankruptcy on March 19th, according to The New York Times. This allows for a company to propose a plan of reorganization in order to keep the business alive and pay creditors over time. Now, the U.S. Bankruptcy Court in Delaware must approve a final sale.
When filing for bankruptcy, The Weinstein Company listed $500 million to $1 billion in liabilities and $500 million to $1 billion in assets, according to CNBC.
Next: This has important implications for Weinstein’s accusers.
6. All of Weinstein’s accusers are now released from their nondisclosure agreements
The even more significant update is that at the same time that The Weinstein Company declared bankruptcy, it also released all of Harvey Weinstein’s accusers from their nondisclosure agreements. This includes both victims of Weinstein’s alleged misconduct and witnesses to it.
“Effective immediately, those ‘agreements’ end,” the company said in a statement. “No one should be afraid to speak out or coerced to stay quiet.”
This is an outcome that Schneiderman had advocated for. He said that this “will finally enable voices that have for too long been muzzled to be heard.” There have already been dozens of accusations made against Weinstein, including from women who broke their nondisclosure agreements. However, this step means we may be hearing many more accusations going forward.
Next: This is what might be next for The Weinstein Company.
7. A private equity firm hopes to acquire The Weinstein Company’s assets
So what’s next for The Weinstein Company? Well, the studio has now lined up Lantern Capital Partners as the first bidder in the bankruptcy process.
According to Variety, Lantern Capital’s bid is for $424.5 million — $310 million in cash, in addition to the assumption of $114.5 million in liabilities. That’s almost $80 million less than the Maria Contreras-Sweet deal that had been in the works.
Still, Lantern Capital’s bid just provides the floor, and it’s possible that they will be outbid. According to Reuters, Lionsgate and Miramax may also be interested, since they both made earlier offers.
This all means that civil lawsuits brought by Weinstein’s accusers will be halted, according to The Washington Post. However, Attorney General Schneiderman’s lawsuit will not be halted. He says he will fight to ensure “that victims are compensated, employees are protected moving forward, and perpetrators and enablers of abuse are not unjustly enriched.”
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