Ousting Weinstein Couldn’t Save His Company: The Weinstein Company Files for Bankruptcy

In the aftermath of at least 80 sexual harassment claims against its co-founder and former co-Chairman, the Weinstein Co. (“TWC”) filed for Chapter 11 bankruptcy on March 19 and intends to sell the assets of its production studio.

On March 18, the Board of TWC approved an agreement with Lantern Capital, whereby the private equity fund agreed to serve as the stalking horse bidder and proposed $310 million in cash for the Company’s assets. Following a series of unsuccessful prior negotiations, the Lantern agreement will be consummated pending court approval and the absence of a higher bid. While the Company currently is cash-strapped, its assets include an extensive library of 277 feature films, television business, and unreleased projects and film rights.

In its filings with the Delaware Bankruptcy Court, TWC acknowledged that the events surrounding Harvey Weinstein’s alleged sexual harassment precipitated its recent actions. Notwithstanding the Board’s decision to fire Weinstein in October 2017, TWC claimed that it became a virtual persona non grata in the industry.

As a result of its former ties with Mr. Weinstein, TWC is also a named party in multiple civil suits. Certain plaintiffs have alleged that the termination of Mr. Weinstein and the allegations against him represent material adverse changes which accelerate TWC’s obligations under various debt agreements. The presence of the current Chapter 11 proceedings means that any successful plaintiff in a sexual misconduct suit against the company would likely receive monetary damages only after the Company’s creditors are paid. Adding to its list of legal woes, the Company is also subject to a civil suit initiated by the Attorney General of the State of New York initiated a civil suit which alleges, among other things, violations of New York Human Rights and Civil Rights Laws. The ongoing Chapter 11 proceedings do not however preclude any claims brought against Mr. Weinstein in his individual capacity.

The bankruptcy case is In re The Weinstein Company Holdings LLC, Bankr. D. Del., No. 18-10601.

Dan Corey, Since Weinstein, Here’s a List of Men Accused of Sexual Misconduct, NBC News (Jan. 10, 2018 at 4:34 pm), https://www.nbcnews.com/storyline/sexual-misconduct/weinstein-here-s-growing-list-men-accused-sexual-misconduct-n816546.

Decl. of Robert Del Genio in Supp. of First Day Relief, In re The Weinstein Company Holdings LLC, No. 18-10601 (Bankr. D. Del. Mar. 20, 2018).

Jodi Kantor & Megan Twohey, Harvey Weinstein Paid off Sexual Harassment Accusers for Decades, N.Y. Times (Oct. 5, 2017), https://www.nytimes.com/2017/10/05/us/harvey-weinstein-harassment-allegations.html.