The bankrupt studio said it has been arguing with the Dallas-based private equity firm over who would pay potentially tens of millions of dollars owed to various creditors at the time the sale closes.
The two parties have threatened to sue each other over the matter, with Lantern accusing The Weinstein Co. of misrepresenting the amounts owed to actors and others involved in its various film and television projects and The Weinstein Co. accusing Lantern of breach of contract.
“The Parties’ disputes have come to a head at a perilous time for the Debtors,” attorneys for The Weinstein Co. warn in documents filed with the Delaware bankruptcy court. “To put it bluntly, the Debtors are running out of both time and money.”
The Weinstein Co. said it needs to complete the asset sale by July 17, or it will be in default of its loan agreement. Meanwhile, Lantern’s debt financing commitment ends on July 15, raising the risk that it would be unable to complete the purchase.
“The failure to close the sale to Lantern would have disastrous consequences for the Debtors and their creditors,” the company’s attorneys warn. “Without a backup bidder and with only weeks left on their [debtor in possession] financing, the failure to close would leave the Debtors with no choice but to liquidate, resulting in significantly reduced recovery for all stakeholders.”
Given these dire circumstances, The Weinstein Co. said it agree to cut the purchase price by $23 million, to $287 million from the initially agreed upon sum of $310 million. Lantern, in turn, agreed to pay outstanding amounts to creditors at the close of the sale.
“Although the Debtors wish there were another option to ensure the consummation of this Sale, there is not,” the Weinstein Co.’s attorneys argue. “Thus, in the exercise of their business judgment, the Debtors have agreed to this settlement because it is in best interests of the estate and the creditors to close the Sale.”
Lantern agreed to cover The Weinstein Co.’s operating costs June 26, with the expectation of closing the sale on July 14. The Weinstein Co. asked the court to shorten the period for parties to raise objections to the revised deal so it will close before The Weinstein Co. finds itself in default.