The Weinstein Co. is looking to get court approval on Tuesday for a sale to Lantern Capital Partners. But to do so, it must overcome the objections of the committee of unsecured creditors, which includes two representatives who allege they were sexually harassed by Harvey Weinstein.
The committee and the Weinstein Co. began the bankruptcy process in relative harmony. But that has fallen apart in the last week, as a dark-horse bidder, Broadway producer Howard Kagan, emerged with an offer of $30 million for Weinstein victims. The Weinstein Co. has dismissed the offer — submitted under the name Inclusion Media — as too late and woefully incomplete. But attorneys for the committee have urged the company to accommodate Kagan’s request for further information and an extension of the bid deadline.
The Kagan offer, posted below, vows to create “the most diverse and progressive film and TV studio in the industry,” and pledges 5% equity in the new company to Weinstein’s victims, on top of the $30 million victims’ fund. Kagan initially bid $315 million, and then upped it to $325 million to meet the minimum criteria for an overbid above Lantern’s $310 million offer. Attorneys for the Weinstein Co. counter that Kagan’s offer lacks a financing commitment, a deposit, a detailed purchase and sale agreement, and any other hallmarks of a serious bid.
“Inclusion Media’s purported offer lacked all of the criteria of a real offer and appeared calculated to disrupt the Lantern sale process, rather than to materialize into a legitimate bid,” the company’s attorneys wrote. “While Inclusion Media’s concept of a victim fund has obvious benefits for a worthy subset of the unsecured creditors, Debtors have seen no evidence to date that Inclusion Media is a serious bidder.”
In a filing on Thursday evening, the Weinstein Co. sought to depose a representative of the creditors’ committee, seeking the committee’s communications with Kagan, as well as with “alleged victims.”
In a statement, attorney Elizabeth Fegan blasted the request as “one more attempt by the Weinstein Company to silence women.” Fegan represents six women who have filed a class-action harassment lawsuit against the Weinstein Co. Five of those women have openly supported the Kagan bid. The sixth, Louisette Geiss, chairs the unsecured creditors committee, which has yet to take a firm position on the Kagan bid. The committee filed an objection to the deposition, which has not taken place.
In its own filing on Monday, the Weinstein Co.’s attorneys accused the committee of working with the class-action plaintiffs and with Kagan to undermine the Lantern sale. The company argues that the Lantern bid is the only qualified offer, and extending deadlines and diverting attention to Kagan risks throwing it away.
“It appears to be a coordinated effort to sabotage the Court-approved process and the Debtors have every right to better understand if 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 company’s attorneys wrote.
Another point of conflict is the committee’s effort to depose Kathy Declesis, who worked in the early 1990s as an assistant to Bob Weinstein. Declesis told the New York Times last fall that she had warned Bob Weinstein about his brother’s sexual misconduct more than 25 years ago. On April 30, James Stang, an attorney for the committee, notified the company that it planned to depose Declesis on May 3.
“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,” Stang wrote.
The committee appears to have been concerned that Bob Weinstein, the chairman of the company, would have some continuing role under Lantern’s ownership. Karin DeMasi, an attorney for the Weinstein Co., responded that “to the best of Debtors’ knowledge, no senior management is or will be involved with the post-closing enterprise.” Stang then confirmed to DeMasi that he had called off the deposition.
The committee has also raised a concern that it is unclear how much money, if any, will be available to unsecured creditors if the Lantern sale goes through.
“The Committee’s objections are narrowly focused on: (a) ensuring that value is properly allocated to unencumbered assets, and (b) preserving the sanctity of the bidding process to ensure that all viable bids are thoroughly considered,” the committee’s attorneys wrote.
Both sides are gearing up for an argument at Tuesday’s hearing in Delaware.
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