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Weinstein Company to file for bankruptcy in a bid to save entertainment assets

The company had been seeking a deal that would spare it from bankruptcy after more than 70 women accused film producer Harvey Weinstein, its ex-chairman, of sexual misconduct.

world Updated: Feb 26, 2018 13:31 IST
Anousha Sakoui
Anousha Sakoui
Bloomberg
Weinstein company,Weinstein,Bankruptcy
Harvey Weinstein attends the 2016 amfAR New York Gala at Cipriani Wall Street in Manhattan, New York, US on February 10, 2016.(REUTERS File)

The Weinstein Company 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 sexual harassment, and in some cases, rape.

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 a $500 million bid backed by billionaire Ron Burkle.

“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.

Emails seeking comment from Contreras-Sweet and Burkle outside business hours were not immediately returned.

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.

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.

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.

Despite Weinstein’s departure, troubles have snowballed, with partners and lenders distancing themselves and a February lawsuit from New York state alleging a pervasive culture of abuse. The complaint said “wing women” and sex scheduling by assistants were examples of how the company aided and abetted Weinstein’s harassment while its board and executives looked on.

Weinstein is one of many powerful men around the country being ousted, amid a movement signified by #metoo and #timesup on social media. The Los Angeles district attorney even created a special task force to deal with a deluge of sexual abuse claims in the entertainment industry.

First Published: Feb 26, 2018 13:31 IST