Bankruptcy judge approves $21-million price cut in Weinstein Co. sale, expected to close Friday
A bankruptcy court judge has approved a $21-million price cut in the sale of the Weinstein Co., the studio devastated by a raft of sexual harassment and assault allegations against its co-founder Harvey Weinstein.
Delaware bankruptcy judge Christopher Sontchi, at a Wednesday hearing, signed off on the company’s new agreement to sell its assets to the Dallas-based private equity firm Lantern Capital Partners for $289 million.
The move gives the companies the green light to complete the transaction and end the studio’s four-month stint under Chapter 11 bankruptcy protection. The deal is expected to close Friday.
The ongoing bankruptcy process has depleted the studio’s staff, which numbered as many as 150 people before the Weinstein allegations. About a third of the remaining 70 employees in New York and Los Angeles will not be offered jobs with the new company, said a person familiar with the matter who was not authorized to comment. The more than 20 layoffs affect divisions such as marketing and public relations.
The New York-based company, known for movies such as “Django Unchained” and “The King’s Speech,” was originally supposed to sell for $310 million, plus the assumption of about $115 million in liabilities related to films and TV shows, under a pact the court first approved in May.
But in another twist in the long saga, the negotiations hit a snag that threatened to capsize the deal. Weinstein Co. and Lantern disagreed over which side would have to make payments on contracts potentially totaling tens of millions of dollars owed to vendors and filmmakers.
Lantern agreed to make the contract payments if the court allowed it to reduce by $23 million the amount of cash it would pay for Weinstein Co. assets, including its 277-film library. But Weinstein Co.’s unsecured creditors balked at the discount, saying it would leave less money on the table for them.
Last week, Lantern and Weinstein Co. said they resolved the dispute with the creditors’ committee by agreeing on the final $289-million purchase price.
“This collective resolution affirms our commitment to closing the transaction,” Lantern Co-Presidents Andy Mitchell and Milos Brajovic said in a statement announcing the deal.
Yet some creditors, including such Hollywood luminaries as Quentin Tarantino and Bradley Cooper, still objected to the deal, saying the terms threatened to deprive them of royalties owed for films they made with the studio. Tarantino’s lawyers said in a recent court filing that Weinstein Co. owes the “Inglorious Basterds” and “The Hateful Eight” director $4.3 million in unpaid royalties and profits. Cooper is owed money for his work on the 2012 film “Silver Linings Playbook.”
The judge overruled those objections, however, tabling the royalties disputes for another hearing after the close of the deal.
Weinstein Co. declared bankruptcy in March with less than $500,000 in cash after failing to find a buyer that would give the company a second life outside the protection of the court. The once high-flying studio faced multiple lawsuits, including a civil rights case brought by the New York attorney general’s office in February. In a surprising turn, New York Atty. Gen. Eric Schneiderman resigned from his post in May after four women accused him of physical abuse in a New Yorker article.
A plan to sell the studio to former Obama administration official Maria Contreras-Sweet and billionaire Ron Burkle for $500 million cratered after the buyers said they discovered millions of dollars in undisclosed liabilities. Lantern had been a minority backer of that prior deal, which promised to remake the company as a female-friendly show business enterprise and establish a settlement fund to compensate women who say Weinstein abused them.
Lantern, which has no experience in the entertainment business, won the assets because it was the lone true bidder for the studio during its bankruptcy auction. Expected offers from companies such as Miramax and Lionsgate never came. Lantern’s solo bid made no promises of a dedicated victims’ fund.
Lantern, known for holdings that include a zinc recycling firm and a bulk shipping operation, has its work cut out for it remaking the hobbled studio into the newly christened Lantern Entertainment. This week the company named a trio of strategic advisors to the entertainment venture: former Lionsgate executive Steve Beeks, former Open Road Chief Financial Officer Alexa Platt and former NBCUniversal Executive Vice President Lauren Zalaznick.
Harvey Weinstein, who was fired from his company in October, is facing criminal sexual assault charges in New York. In June, he pleaded not guilty to charges stemming from a pair of alleged sexual assaults in New York City.
This week, he pleaded not guilty to new charges that he sexually assaulted a third woman and had committed a pattern of sex crimes. The judge in the case allowed Weinstein to remain free on bail. Weinstein has denied all allegations of nonconsensual sex.
2:25 p.m.: This article was updated with news of layoffs at the Weinstein Co.
1:45 p.m.: This article was updated with additional background on the Weintein Co. sale process.
11:16 a.m.: This article was updated with additional details on the Weinstein Co. sale and background on the criminal charges against Harvey Weinstein.
This article was originally published at 9:55 a.m.
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