The Weinstein Co. has entered a “stalking horse” agreement to sell substantially all of its assets to the Dallas-based investment firm Lantern Capital in a transaction that requires the company to file for bankruptcy, as Deadline first reported.
The company filed for Chapter 11 protection from its creditors late Monday in Delaware, after trying unsuccessfully to sell the financially troubled company. The studio said hopes that an orderly sale will allow it to wring the most value from the company’s assets for the benefit of its creditors and other stakeholders.
“While we had hoped to reach a sale out of court, the board is pleased to have a plan for maximizing the value of its assets, preserving as many jobs as possible and pursuing justice for any victims,” said Chairman Robert Weinstein. The Board also expressed its great appreciation to New York Attorney General Eric Schneiderman, and his colleagues, for helping the company achieve these objectives.
Lantern’s deal would be subject to the bankruptcy court’s approval. As a stalking-horse bidder, it was chosen to make a first offer for The Weinstein Co.’s assets, though other potential buyers could also vie for the company’s assets. A stalking horse effectively sets the bar so that other bidders can’t low-ball the asset.
The Weinstein Co. said it selected Lantern, which was part of an investor group led by former Obama Administration official Maria Contreras-Sweet, because it agreed to maintain the assets and employees as a going concern.
“As with all our businesses, Lantern will improve the performance of the company’s businesses with the utmost respect to all employees and promote a diverse and transparent environment,” Lantern co-founders Andy Mitchell and Milos Brajovic said in a statement.
Lantern’s founders said they planned to position the company as “a pre-eminent content provider” while cultivating a positive image. The company specializes in corporate restructuring and operational turn-arounds, and has a diverse portfolio of assets, with holdings in zinc recycling, shipping, luxury resorts and auto dealerships.
The Weinstein Co. said it was ending non-disclosure agreements that it said were used by Harvey Weinstein “as a secret weapon to silence his accusers.” The studio has been in turmoil since last October, when the New York Times and The New Yorker published damaging accounts of sexual harassment and abuse by the company’s co-founder.
“The Company expressly releases any confidentiality provision to the extent it has prevented individuals who suffered or witnessed any form of sexual misconduct by Harvey Weinstein from telling their stories,” the company said in a statement.
Schneiderman issued a statement applauding The Weinstein Co.’s decision to lift employee non-disclosure agreements.
“This is a watershed moment for efforts to address the corrosive effects of sexual misconduct in the workplace,” Schneiderman said. “The Weinstein Company’s agreement to release victims of and witnesses to sexual misconduct from non-disclosure agreements — which my office has sought throughout this investigation and litigation — will finally enable voices that have for too long been muzzled to be heard.”
The Weinstein Co. admitted it was running out of cash late February, when it issued a statement late on a Sunday evening saying it was contemplating a bankruptcy filing. That announcement may well have been a desperate attempt to accelerate stalled deal talks with an investor group led by Contreras-Sweet.
But eleventh-hour agreement to sell the studio to Contreras-Sweet’s investor group collapsed on March 6, as the would-be acquirers discovered more than $50 million in undisclosed liabilities.
In documents accompanying its petition for financial reorganization under Chapter 11 of the bankruptcy codes, The Weinstein Co. lists China’s Dalian Wanda’s film unit, Wanda Pictures, as one of its biggest creditors, owed $14.4 million. Viacom International, Sony Pictures and Walt Disney Pictures and Television are owed a combined $10 million, and the talent agency Creative Artists Agency also is among the top creditors, owed $1.5 million.
The firm also owes millions to some of the most prominent law firms in the entertainment business, including Boies, Schiller & Flexner, O’Melveny & Myers and Greenberg Glusker Fields. One law firm in Florida, Leto Bassuk, is owed $17.4 million in a claim that’s disputed.