The Weinstein Company Forced Into Bankruptcy As Sale Falls Apart
The Weinstein Company is headed for bankruptcy after a sale fell through prior to the final steps.
THE WEINSTEIN CO. TO FILE FOR BANKRUPTCY
The board of the former film production company of disgraced mogul Harvey Weinstein has said it has no choice but to pursue bankruptcy in a letter to potential buyers Maria Contreras-Sweet and Ron Burkle. The pair were part of a group of investors who wanted to revamp and redeem the company, but decided not to after a lawsuit was brought on it by New York Attorney General Eric Schneiderman.
The terse letter stated, “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.” It continued, “we must conclude that your plan to buy this company was illusory and would only leave this Company hobbling toward its demise to the detriment of all constituents.”
The short letter asserted that the buyers reneged on an earlier agreement that Contreras-Sweet would infuse a large sum of money to keep the company afloat while the sale closed. She is a former Obama administration official, and had agreed to take a 51% stake in the company and install a female-majority board.
On Monday, a spokesperson from the Attorney General’s office shared its disappointment with the company’s decision to file. “Over the past two weeks, we had very productive discussions with both parties about accomplishing the Attorney General’s goals of compensating victims, protecting employees, and rooting out those who enabled years of sexual abuse at the Weinstein Company,” said director of communications and senior counsel Eric Soufer in a statement. “We are disappointed that despite a clear path forward on those issues—including the buyer’s commitment to dedicate up to $90 million to victim compensation and implement gold-plated HR policies—the parties were unable to resolve their financial differences. We will continue to pursue justice for victims in the event of the company’s bankruptcy, and our investigation into the pattern of egregious abuse by Harvey Weinstein and his enablers is ongoing.”
Read the full letter from the Weinstein Company board below.
In a meeting with New York’s Attorney General on February 21, you asked The Weinstein Company to work with you as “partners” toward the common goal of saving the Company, preserving jobs and establishing a victims’ fund. Given the Company’s financial condition, you urged that “time is of the essence” and represented that you were prepared to enter an agreement promptly. That agreement, we were told, could no longer impose any closing obligation or reverse break-up fee; instead, Maria assured us that the Company could — and must — rely on buyer’s good-faith intention to sign and close the deal. We mutually agreed that parties should have open and free communication with the Attorney General’s office, and any other governmental body with an interest in the transaction.
In the four days since that meeting, we and our advisors have worked tirelessly to finalize an agreement to present to the Attorney General for his approval. While acceding to virtually every demand you imposed, we made clear that the one thing the Company needed in furtherance of your good faith was interim funding to run our business and maintain our employees – employees who have remained dedicated to the Company even amidst great uncertainty. During this time, we waited patiently for you to deliver the terms you represented would save this Company from certain bankruptcy.
Instead, late last night, you returned to us an incomplete document that unfortunately does not keep your promises of February 21, including with respect to the guiding principles set forth by the Attorney General. Nowhere, for instance, is there any provision for the “gold standard” human resources policies you promised; instead, you added all new contingencies relating to David Glasser, the former employee of The Weinstein Company who was recently terminated for cause. Likewise, there is no provision for necessary interim funding to ensure your future employees were paid; instead, you increased the liabilities left behind for the Company, charting a financial path that will fail. Other new conditions make clear that a closing, if one were to happen at all, could take many months (or longer). In short, the draft you returned presents no viable option for a sale.
We have believed in this Company and in the goals set forth by the Attorney General. Based on the events of the past week, however, we must conclude that your plan to buy this company was illusory and would only leave this Company hobbling toward its demise to the detriment of all constituents. This Board will not let that happen. Despite your previous statements, it is simply impossible to avoid the conclusion that you have no intention to sign an agreement – much less to close one – and no desire to save valuable assets and jobs. That is regrettable, but not in our power to change.
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.
The Board of Representatives
of The Weinstein Company