Karin DeMasi offered this disclosure in an email sent this week to an attorney for the unsecured creditors committee, seeking to quash the planned deposition of Bob Weinstein’s former assistant. She argued it would be unnecessary, given earlier testimony by The Weinstein Co.’s chief restructuring officer, Robert Del Genio, who said that “to the best of debtor’s knowledge,” none of the senior management would join the new venture.
“The deposition is intended to be used if any of the bidders fail to confirm to the committee’s satisfaction that senior management who may have been responsible for the work environment are excluded from the buyer’s post-closing enterprise,” wrote attorney James Stang, who has done extensive work recovering money for victims of sexual abuse.
Documents filed this morning in bankruptcy court also provide a rare glimpse of the private — and, at times, contentious — discussions taking place between The Weinstein Co., the unsecured creditors committee and Inclusion Media, the dark-horse bidder for the bankrupt company’s film and television assets.
The Weinstein Co. expresses frustration that the Unsecured Creditors Committee is pressuring it to spend substantial time with Inclusion Media and its attorneys, even though there is no indication that it has the financing to make a qualified bid. It defends its request to depose committee members about their ties to Inclusion Media.
“It appears to be a coordinated effort to sabotage the court-approved process and the debtors have every right to better understand it that is the case, and if so, why the committee is subjecting the estate to the serious risks associated with losing the bird in the hand,” the Weinstein Co.’s attorneys wrote.
Inclusion submitted a bid letter on May 1, a day after the court-mandated bid deadline had passed, and requested an extension to formalize the offer. An attorney for The Weinstein Co. responded about an hour and a half later, asking for a phone call, saying, “we and the other consultation parties have several questions about your indication of interest.”
After the call wrapped up, Andrew Glenn, an attorney representing Inclusion Media, submitted a list of questions that needed answers. The firm asked for the Weinstein Co.’s analysis of the contracts on the “cure” list (and which assets were associated with each proposed payment), for more details about how the company’s cash flow might be impacted by contracts containing “key man” provisions, as well as questions about TV projections and debt reconciliation.
“We remain confident that we can provide firm commitments promptly after we have the outstanding information,” Glenn writes.
After the call, an attorney for The Weinstein Co. responded with an email saying that the company had concluded that answering these questions would amount to a “diversion of scarce management resources,” and that it would instead focus its time and attention to wrapping up its bird-in-the-hand sale to Lantern.
“While your list may appear short, it is very detailed and would require weeks, not hours or even days, to fully address,” wrote attorney Paul Zumbro. “We simply don’t have that time.”
The Weinstein Co. issued a press release that evening announcing that Lantern Capital had won the bid for the sale of the company’s assets, saying the stalking horse bidder afforded the “highest and best value for the estate and the creditors.”
That provoked an angry response from the unsecured creditors committee.
“We are quite surprised and distressed that the debtors did not make any effort to contact Inclusion regarding its requests,” wrote James Stang, the Los Angeles attorney representing the unsecured creditors. “I would have expected that the debtors would have called committee counsel, if not all of the consulting parties, to discuss the response to the diligence requests before shutting down the process.”
The following day, The Weinstein Co.’s attorneys followed up with an email describing why the company had failed to give further consideration to Inclusion Media. Its offer arrived late and fell short of the minimum $325 million bid amount set by the court. It also lacked a good-faith deposit, financial statements or other written evidence establishing its ability to pay the purchase price in cash, the Weinstein Co. said.
“Inclusion Media’s indication of interest is not even a bid, much less the highest and best bid,” Zumbro wrote. “That said, while debtors remain focused on completing the Lantern transaction … we are unable to extend any of the applicable deadlines, the data room remains open and we are prepared to make a representative of the debtors available for a call of reasonable duration to discuss your remaining request.”
Inclusion’s attorney responded by upping the offer to $324.5 million. The bankruptcy court holds a hearing tomorrow regarding the sale of The Weinstein Co.
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