The Weinstein Co. is set to turn to bankruptcy to try and save its entertainment assets from the financial problems that erupted as dozens of actresses came forward to accuse co-founder Harvey Weinstein of decades of sexual misconduct, sparking a global #MeToo movement among women to reveal about past sexual abuses by men.
The board failed to sell the film studio to investors led by Maria Contreras-Sweet, who ran the Small Business Administration from 2014 to 2017, according to a copy of a letter provided by Weinstein Co. Sunday. The company blamed the investor group for the collapse of the $500 million bid backed by billionaire Ron Burkle.
Harvey Weinstein
“While we deeply regret that your actions have led to this unfortunate outcome for our employees, our creditors and any victims, we will now pursue the Board’s only viable option to maximize the Company’s remaining value: an orderly bankruptcy process,” Weinstein Co. said in the emailed letter addressed to Contreras-Sweet and Burkle.
Read about the N.Y. Attorney General’s suit against Harvey Weinstein here.
According to the letter, negotiations had continued after the New York Attorney General Eric Schneiderman earlier this month said the offer to buy the studio was unacceptable. The deal lacked “adequate redress, including a lack of a sufficient victims’ compensation fund.” It would also keep victims “muzzled by insidious non-disclosure agreements,” he said.
The investor group led by Contreras-Sweet had said in a Feb. 21 meeting with the company and the New York attorney general that it would work with the Weinstein Co. to enter an agreement on the deal promptly, according to the letter from the company. After days of work on completing an agreement, the investor group sent a document to Weinstein Co. that increased liabilities for the studio and didn’t include provisions to ensure employees were paid, according to the letter.
Emails seeking comment from Contreras-Sweet and Burkle outside business hours were not immediately returned.
#MeToo
The furor over cascading allegations that Weinstein sought sex from actresses invited to hotel rooms on the pretext of discussing their projects encouraged women who had been harassed by powerful men to name and shame their abusers. The list of top executives and political leaders resigning after such allegations continues to grow globally and includes names from Steve Wynn, founder and former chairman of Wynn Resorts Ltd., to former U.S. Senator Al Franken, investor Dave McClure, formerly of 500 Startups, and Amazon Studios former Chairman Roy Price.
The Los Angeles district attorney even created a special task force to deal with a deluge of sexual abuse claims in the entertainment industry.
While alleged harassment and other misconduct by men in a range of professions has ended some high-profile careers, the Weinstein Co. stands out in facing bankruptcy directly because of such accusations.
The studio, creator of Oscar-winning pictures such as “The King’s Speech” and hit TV shows such as “Project Runway,” has been reeling from a loss of business since the allegations against its co-founder surfaced. Weinstein, who faces a wave of sexual-assault claims stretching back to the 1970s, was ousted from his studio in October 2017 after the New York Times and the New Yorker Magazine published accounts in which women accused him of sexual harassment and rape. He has denied any non-consensual sexual activity.
Shunned
Since Weinstein’s departure, Tom Barrack’s Colony Capital has dropped plans to make a cash infusion, and Fortress Investment Group LLC’s negotiations to provide a $35 million lifeline were said to end.
Read billionaire Tom Barrack’s take on the stakes for Weinstein Co. here.
One lender, AI International Holdings, affiliated with Len Blavatnik’s Access Industries, said in a lawsuit that Weinstein’s departure from the company and the circumstances surrounding it were an event of default under a $45 million loan. It entered into a forbearance agreement.
Apple Inc., Viacom Inc. and A+E Television Networks LLC had previously pulled projects with the Weinstein Co.
