Bankruptcy is just the latest development in the fallout for the Weinstein Co. Here’s a rundown of what to know:
Bankruptcy … Remind me what that is, again?
Harvey Weinstein instantly became a Hollywood pariah after the sexual assault allegations, and his downfall would become tied to his company. All but three company board members resigned, and although his brother and co-founder Bob Weinstein had initially tamped down rumors of a fire sale, reports soon surfaced that the company entered talks to sell.
The Weinstein Co. filed for Chapter 11 bankruptcy this week, which lets it propose a plan for reorganization and to pay creditors via a sale of the company. It listed $500 million to $1 billion in debts and the same range for assets. The U.S. Bankruptcy Court in Delaware has to approve the final sale in a bankruptcy auction.
Weinstein Co. reached a “stalking horse” agreement with Lantern Capital, meaning Lantern set the floor with its offer, but it may compete with other potential bidders during a court-supervised auction.
The Lantern bid of $424.5 million includes assuming $114.5 million in liabilities, Variety reported, adding equity holders (like Bob and Harvey Weinstein) “are expected to be wiped out,” Variety reported.
While Harvey Weinstein had been fired, his brother Bob remains chairman of the board of directors. “While we had hoped to reach a sale out of court, the board is pleased to have a plan for maximizing the value of its assets, preserving as many jobs as possible and pursuing justice for any victims,” Bob said in a statement.
Lantern’s Andy Mitchell and Milos Brajovic said they will “improve the performance of the company’s businesses with the utmost respect to all employees and promote a diverse and transparent environment” and “look forward to following through on our promise to reposition the business as a preeminent content provider, while cultivating a positive presence in the industry.”
So what does this mean for Harvey Weinstein’s accusers?
Receiving bankruptcy protection means that secured creditors will get paid before any women suing the Weinstein Co. (Bob Weinstein is listed as an unsecured creditor, per Variety.) Civil lawsuits already filed by Harvey Weinstein’s accusers against the company will be halted, and they can’t bring new legal claims.
But there could be other legal recourse for such accusers; New York Attorney General Eric Schneiderman last month sued the company on behalf of employees, and since that civil rights lawsuit was brought by a law enforcement agency, bankruptcy protection wouldn’t halt it.
In a statement Monday, Schneiderman said his office “will continue to fight for victims’ best interests throughout the bankruptcy proceedings, and engage with all parties, including the Weinstein Company and Lantern, in an ongoing effort” to ensure “that victims are compensated, employees are protected moving forward, and perpetrators and enablers of abuse are not unjustly enriched.”
The bid from Lantern still “leaves open the question of how much money will be left for victims of Weinstein’s alleged harassment,” Variety reported. “Insurance is expected to provide up to $30 million, though the insurer may yet contest its obligation to pay.”
How big a deal is it that people are released from their NDAs?
One of the burning questions in the aftermath of the Weinstein allegations was how a pattern of intimidation and abuse persisted so long. Many pointed to nondisclosure agreements, which were also part of settlements to resolve claims against others accused of sexual harassment and assault, such as Bill Cosby and former Fox News CEO Roger Ailes.
“Since October, it has been reported that Harvey Weinstein used nondisclosure agreements as a secret weapon to silence his accusers. Effective immediately, those ‘agreements’ end,” the company said in a statement Monday. “No one should be afraid to speak out or coerced to stay quiet.”
Schneiderman called it a “watershed moment for efforts to address the corrosive effects of sexual misconduct in the workplace.”
He added: “The Weinstein Company’s agreement to release victims of and witnesses to sexual misconduct from nondisclosure agreements — which my office has sought throughout this investigation and litigation — will finally enable voices that have for too long been muzzled to be heard.”
People who break these kinds of confidential agreements can be forced to pay back their settlement amounts or more. Still, after the Weinstein revelations in October, some women began breaking confidential agreements to publicly accuse prominent figures in the entertainment industry of wrongdoing.
What does this mean for possible criminal charges against Weinstein?
Witnesses and accusers being released from their NDAs could lead to a wave of new accusations. But there are already criminal investigations in the works.
The Los Angeles Police Department has sent three cases to the Los Angeles district attorney. The Los Angeles Times reported that “an experienced sex crimes deputy district attorney from a special task force” had recently spent hours interviewing an actress who alleges Weinstein raped her at the Beverly Hills Hotel in 2013.
Manhattan District Attorney Cyrus Vance’s office is reportedly investigating other accusations against Weinstein, including the claim of actress Paz de la Huerta that Weinstein raped her twice in 2010.
Then there are Ambra Battilana Gutierrez’s allegations that Weinstein assaulted her, which were included in Ronan Farrow’s New Yorker article exposing allegations against Weinstein. Vance has been under fire for his office’s handling of the 2015 case and, later, for possible conflicts of interest between the D.A. and movie mogul.
Vance had repeatedly said there was insufficient evidence to prosecute, and on Monday, his spokesman said the account in New York magazine “bears little resemblance to the facts.”
New York Gov. Andrew M. Cuomo on Monday announced that he directed the state’s attorney general to review the 2015 case, citing “questions about the handling” of it by the D.A. “It is critical not only that these cases are given the utmost attention but also that there is public confidence in the handling of these cases.”
Why hasn’t Weinstein Co. filed for bankruptcy before?
Earlier this year, Weinstein Co. had been in talks to sell to an investor group. The offer to buy for $500 million included taking on $225 million in debt, according to Variety. The idea was to rescue the company from bankruptcy, retain employees and install a board of directors that was majority women.
But that plan fell apart after Schneiderman filed his lawsuit, which he brought in part because of the reported pending sale. Such a sale “would leave victims without adequate redress, including a lack of a sufficient victims compensation fund,” Schneiderman said in a statement.
The attorney general’s office also thought the sale would have allowed “perpetrators or enablers of the misconduct to see a windfall, and allow top officials at TWC who share responsibility for the misconduct to serve in executive positions of the new entity — where they would again oversee the adjudication of HR complaints, including those of sexual harassment, intimidation, and assault.”
An attempt to revive talks two weeks ago failed after the buyers said they found undisclosed liabilities.