The Committee of Unsecured Creditors in The Weinstein Co. bankruptcy are objecting to the sale of the studio’s film and television assets to the stalking-horse bidder, Lantern Entertainment.
In documents filed with the bankruptcy court, the creditors say The Weinstein Co.’s board and management — principally Bob Weinstein — decided to sell the studio to Lantern without knowing a number of critical details, including the value of its domestic and foreign film rights, its TV rights, its production assets or home entertainment rights.
“Without knowing the respective value of the assets, in particular, the value of the unencumbered assets that are being cannibalized through the sale, it is mystifying how (the Weinstein Co.) could have determined that the sale to Lantern was better than the alternatives, including an independent sale of unencumbered assets,” the creditors say.
The Unsecured Creditors Committee also filed documents indicating plans to depose Lantern CEO Andy Mitchell and representatives of The Weinstein Co. on May 2, to ask about any communications involving co-founders Bob and Harvey Weinstein since Dec. 1. The committee’s lawyers plan to ask the Dallas-based private equity firm why it entered into the agreement to purchase studio’s assets, and how it plans to manage and staff the studio after the sale, according to court documents.
Sources close to the bidding process said this skepticism — and suspicion that either Weinstein brother could be pulling strings behind the scenes — is unavoidable given the sordid circumstances in which TWC fell into bankruptcy — the sexual assault and harassment allegations leveled at Harvey Weinstein that prompted his ouster last October. The source said that Lantern, which has been the stalking horse since the bid by Yucaipa & Maria Contreras-Sweet cratered (Lantern was in for 10%), has already been asked those questions in meetings with New York Attorney General Eric Schneiderman, whose office also pressed to make sure neither Weinstein brother would be part of the company going forward. In addition, Bob Weinstein and everyone else with an equity stake lost that in entirety. And Weinstein finds himself on the line of unsecured creditors for a $10 million loan he made to the company several years ago.
The committee also plans to question Bob Weinstein’s former assistant, Kathy DeClesis, who told The New York Times that she had confronted him about his brother’s behavior more than quarter-century ago.
Taken together, these depositions appear to reflect concern that Bob Weinstein will remain involved in the studio following the sale. A spokesperson for Bob Weinstein could not immediately be reached for comment, but a person familiar with the matter said neither Weinstein brother would be involved in the new, progressive studio envisioned by Lantern Entertainment.
The unsecured creditors committee’s opposition to the Lantern sale comes as many of the prospective bidders for The Weinstein Co., including Miramax and Lionsgate, MGM and Shamrock, decided not to submit bids, leaving Lantern seemingly the winner, by default.
The unsecured creditors note in their documents the court-supervised sale process required parties to raise their objections before it would be clear whether other bidders would emerge for The Weinstein Co.
Among the concerns raised by the Unsecured Creditors Committee are $20 million in payments The Weinstein Co. made within 90 days of the bankruptcy filing, and the planned sale of documents and records. It’ unclear whether the transaction includes emails and other communication that would be relevant in ongoing civil suits stemming from co-founder Harvey Weinstein’s alleged sexual misconduct.
“The unimpeded access to and proper retention of the debtor’s books and records (including email communications) is of vital interest to the committee (and subsequent litigation trustee), as well as all other litigant parties,” the unsecured creditor’s committee notes.