Weinstein Co. files for bankruptcy in wake of sexual misconduct scandal
NEW YORK CITY -- The Weinstein Co. filed for bankruptcy protection on Monday with a buyout offer in hand from a private equity firm, the latest twist in its efforts to survive the sexual misconduct scandal that brought down co-founder Harvey Weinstein, shook Hollywood and triggered a movement that spread out to convulse other industries. The company also announced it was releasing any victims of or witnesses to Weinstein's alleged misconduct from nondisclosure agreements preventing them from speaking out.
That step had long been sought by New York State Attorney General Eric Schneiderman, who filed a lawsuit against the company last month on behalf of its employees.
The Weinstein Co. said it has entered into a "stalking horse" agreement with an affiliate of Dallas-based Lantern Capital Partners as part of its bankruptcy protection filing in U.S. Bankruptcy Court in Delaware. That means Lantern has agreed to buy the company, subject to approval from the court.
The company made the filing about two weeks after negotiations to sell the company to a group of investors fell apart. Lantern, which had been one of those investors, has now offered to buy most of the assets of the company and keep on its employees, the Weinstein Co. said.
Other bidders also could emerge, particularly those interested in the company's lucrative 277-film library, which includes award-winning films from big-name directors like Quentin Tarantino and horror releases from its Dimension label. Free of liabilities, the company's assets could increase in value in a bankruptcy.
The movie and TV studio becomes the first high-profile company to be forced into bankruptcy in the nationwide outcry over workplace sexual misconduct. Dozens of prominent men in entertainment, media, finance, politics and other realms have seen their careers derailed, but no other company has seen its very survival as tightly intertwined with the fate of one man as the Weinstein Co.
In more fallout over the scandal, New York's governor directed the state attorney general to review the 2015 decision by the Manhattan district attorney's office not to prosecute a 2015 case involving an Italian model who said Weinstein groped her.
Weinstein, who was fired as CEO of his company in October, has denied any allegations of non-consensual sex.
Hanging in the balance is the fate of more than 100 employees and several lawsuits filed by Weinstein's accusers.
Under bankruptcy protection, those lawsuits will be halted and no new legal claims can be brought against the company. Secured creditors will get priority for payment over the women suing the company.
However, the lawsuit filed by Schneiderman's office will not be automatically halted because it was filed by a law enforcement agency.
The bankruptcy process also will bring the company's finances into public view, including the extent of its debt. Negotiations to sell the company to a group of investors led by businesswoman Maria Contreras-Sweet fell apart earlier this month after the buyers claimed they discovered up to $64 million in undisclosed liabilities, including $27 million in residuals and profit participation. Those liabilities come on top of $225 million in debt, which the buyers had said they would be prepared to take on as part of a $500 million acquisition deal.
The Weinstein Co. already had been struggling financially before the scandal erupted in October with a news stories in The New York Times and The New Yorker. Brothers Harvey and Bob Weinstein started the company in 2005 after leaving Miramax, the company they founded in 1979 and which became a powerhouse in '90s indie film with hits like "Pulp Fiction." After finding success with Oscar winners "The Artist" and "The King's Speech," the Weinstein Co.'s output and relevance diminished in recent years. The company let go 50 employees in 2016 and continuously shuffled release dates while short of cash.
Several other executives and all but three members of the board of directors also have left the company. Last year, the studio sold distribution rights for the movie "Paddington 2" to Warner Bros. for more than $30 million.