The Weinstein Co. announced Monday that it had filed for bankruptcy, finding itself unable to survive the allegations of sexual abuse leveled against co-founder Harvey Weinstein last fall.
The company may yet be able to reorganize and continue to produce TV shows and films under new ownership. Lantern Capital put in a “stalking horse” bid, which provides a floor for a bankruptcy auction.
“The Board selected Lantern in part due to Lantern’s commitment to maintain the assets and employees as a going concern,” the company said in a statement. “The Company hopes that this orderly sale process under the supervision of the Bankruptcy Court will allow it to maximize the value of the Company’s assets for the benefit of its creditors and other stakeholders.”
The company also announced that it has released its employees from their non-disclosure agreements, as part of an ongoing negotiation with New York Attorney General Eric Schneiderman.
“No one should be afraid to speak out or coerced to stay quiet,” the company said. “The Company thanks the courageous individuals who have already come forward. Your voices have inspired a movement for change across the country and around the world.”
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According to a source familiar with the talks, Lantern’s bid is somewhere in the range of $300 million to $320 million, most of which would come in the form of assumed debt. That is nowhere near the $500 million bid from billionaire Ron Burkle and others, which collapsed two weeks ago.
The Lantern bid leaves open the question of how much money will be left for victims of Weinstein’s alleged harassment. Insurance is expected to provide up to $30 million, though the insurer may yet contest its obligation to pay. Under the Burkle bid, revenue from several unreleased films would have gone into a fund to supplement the insurance, bringing the total to as much as $90 million.
Lantern has never invested in entertainment before, but it is not new to the Weinstein sale process. The Dallas-based investment firm provided much of the backing for the Burkle bid. For now, Burkle and his partner, Maria Contreras-Sweet, are not involved in Lantern’s stalking horse bid, though that could change. Burkle and Contreras-Sweet are both interested in acquiring Weinstein Co. assets in bankruptcy, and it seems unlikely that they would bid against Lantern.
The Weinstein Co. is known to owe about $225 million under a credit facility led by Union Bank. Burkle’s group balked after the Weinstein Co. disclosed an additional $56 million in debt, including an arbitration award, residuals, and various unpaid bills. In bankruptcy, the equity holders of the Weinstein Co. — including Bob and Harvey Weinstein — are expected to be wiped out.
The allegations against Harvey Weinstein, first documented by the New York Times on Oct. 5, tipped the company into a death spiral. He was fired three days later, and subsequently resigned his position on the company board. TV deals were canceled and the company was forced to take film releases off the calendar. As revenue dried up, the company struggled to pay its bills and the staff has dwindled from 150 to less than 100 employees. The company’s credit cards were frozen in recent weeks, and creditors including a Canadian distributor and a Swiss chocolatier filed lawsuits over unpaid bills.
Bidders have been circling since an on-again, off-again deal to sell the company to Burkle’s group collapsed on March 6. Aside from Lantern, however, none of the bidders are believed to be interested in keeping the company as a going concern, instead focusing on the value of the company’s library. Potential bidders include Lionsgate, beIN Media (the owners of Miramax), Vine Alternative Investments, Shamrock Capital, Killer Content and A+E Networks. beIN would have a special incentive to unite the 277-film Weinstein library with the 700-plus titles in the Miramax library, while A+E is keen to take control of Lifetime’s “Project Runway.”
TWC bankruptcy release by gmaddaus on Scribd
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