Weinstein Company Reaches Deal to Avoid Bankruptcy
Harvey Weinstein at the 2016 amfAR New York Gala. (NYC)
Ever since revelations about Harvey Weinstein’s alleged sexual misconduct started making headlines in October, the fate of his once-powerful Hollywood studio has been hanging in the balance.
On Thursday night, after a series of failed attempts to broker a sale, a deal was announced between The Weinstein Company and a group of investors led by a former Obama administration official. The agreement would allow the company to avoid bankruptcy, compensate alleged victims and emerge as a new studio led by a female-majority board of directors.
“This next step represents the best possible pathway to support victims and protect employees,” Maria Contreras-Sweet, the leader of the investor group, said in a statement.
Contreras-Sweet, who ran the Small Business Administration under President Barack Obama, said the new company would save about 150 jobs, protect the small businesses still owed money by the company and establish a victims’ compensation fund that would supplement the company’s insurance coverage.
Under the agreement — valued at $500 million — the investor group will receive most of the company’s assets, including the “Project Runway” television show and its 277-film library. The group, which is also backed by billionaire Ron Burkle, will also assume the company’s approximate $225 million of debt.
Weinstein has denied the scores of allegations of sexual misconduct against him, but he was fired from his own company last October. The company has since been in turmoil, and at the start of this week, announced that it would file for bankruptcy after earlier sale talks fell through. Had that occurred, it would have been harder for victims to receive compensation.
The new deal was brokered by New York Attorney General Eric Schneiderman, who is pursuing a civil rights lawsuit against the company and alleges that company executives and its board repeatedly failed to take meaningful steps to curb Weinstein’s behavior.
“There was a human resources department at The Weinstein Company that not only didn’t do anything, but it appears to have been manipulated by Harvey into helping him cover it up,” Schneiderman said in an interview for the FRONTLINE documentary, Weinstein. “There were lots of complaints. There were lots of reports of harassment, abuse, and a toxic work environment. Not one formal investigation by human resources, by the corporation, into Harvey’s conduct. It’s sort of unfathomable.”
Schneiderman told FRONTLINE that Weinstein’s 2015 contract renewal, signed off on by the company’s board “had provisions in it that provided essentially a sliding scale for sexual misconduct, that if he engaged in one act of misconduct he’d have to pay a certain amount, if he engaged in a second act he’d have to pay a larger amount. Essentially monetizing this pattern of abuse.”
Bob Weinstein, who heads the company, told FRONTLINE in statement, “any suggestion that the Code of Conduct monetized sexual harassment … is a gross misunderstanding of its substance and intent.” He has denied the board had any knowledge of his brother’s alleged misconduct.
According to Variety, Schneiderman had objected to the proposed terms of an earlier deal because its victims’ compensation fund was too small and because he wanted stricter sexual harassment policies for the company. Schneiderman also did not approve of plans to promote David Glasser, the chief operating officer under Weinstein, to chief executive. Glasser has since been fired by the board.
In helping broker the deal, Schneiderman had insisted that any agreement benefit Weinstein’s alleged victims. He held a meeting with the major parties in his office on Thursday to help reach an agreement.
In a statement, Schneiderman said that both parties had agreed that the re-branded company would create a “real, well-funded victims compensation fund, implement HR policies that will protect all employees, and will not unjustly reward bad actors.” He added, “We will work with the parties in the weeks ahead to ensure that the parties honor and memorialize these commitments prior to closing.”
A source familiar with the negotiations declined to speak on the record to FRONTLINE, but said that there’s still much work to be done before a deal is finalized.
Before last night’s announcement, Schneiderman had told FRONTLINE that he intends to continue looking for indications of systematic misconduct within the company.
“This is something we’re seeking to get to the bottom of, how this was allowed to go on for so long with a lot of people knowing about it and how this system of enabling a cover-up worked,” he said.
— Nick Verbitsky contributed reporting to this story.