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Delaware— A Delaware bankruptcy judge said on Tuesday that she will approve a private equity firm's purchase of the Weinstein Co., the studio forced into bankruptcy by the sexual misconduct scandal that brought down Hollywood mogul Harvey Weinstein.
Judge Mary Walrath gave her approval after Dallas-based Lantern Capital emerged last week as the sole qualifying bidder for the company.
Lantern offered to pay $310m in cash for the Weinstein Co.'s assets and to assume $127m in project-related debt. It also agreed to cover obligations related to the assumption of certain contracts and leases.
Attorneys for the committee of unsecured creditors said Tuesday that the actual price paid by Lantern will be closer to $260 million, based on the difference between the value of the Weinstein Co.'s assets at the time of Lantern's bid and the current value of those assets.
COMPANY SOUGHT BANKRUPTCY PROTECTION AFTER SCANDAL
The company's primary assets are a lucrative 277-film library, a television production business and an unreleased film portfolio that includes four distribution-ready films and other projects in various stages of development.
"The Lantern deal represents full and fair value for the company," said Paul Zumbro, an attorney representing Weinstein Company Holdings and 54 related entities.
The company sought bankruptcy protection in March amid a sexual misconduct scandal that brought down co-founder Harvey Weinstein and triggered a nationwide movement to address predatory sexual behaviour and harassment in the workplace.
It's unclear whether Weinstein's accusers will receive any money from the bankruptcy sale. But an attorney for the official committee of unsecured creditors, which includes two alleged victims of Weinstein, said the bankruptcy case was the result of the bravery of women willing to stand up and have their voices heard.
"This case has a lot of meaning for a lot of people," attorney Debra Grassgreen said.
Grassgreen noted that the committee successfully fought for the preservation of the Weinstein Co.'s books and records and its electronic data, saying litigation claims may prove to be the most significant recovery for Weinstein's alleged victims.
Grassgreen also noted that although Lantern cannot be held liable for any pre-bankruptcy actions by Weinstein Co. employees, any current or former employees of the company won't be able to escape potential liability by becoming affiliated with Lantern.
"They're not getting cleansed by that," she said.
14 PENDING CIVIL CASES
Harvey Weinstein, who has been accused of misconduct ranging from harassment to rape, has denied any allegations of nonconsensual sex.
Walrath on Tuesday granted a request by Weinstein's attorney to have the company provide copies of emails between him and various accusers related to 14 pending civil cases.
Scott Cousins said his client needs the materials to defend himself in criminal and civil cases.
"He has a lot going on," Cousins said.
Meanwhile, it's unclear how proceeds from the sale will be allocated to the Weinstein Co.'s various creditors other than Union Bank, which stands to be paid about $200m when the sale closes. Union Bank was the company's major pre-bankruptcy lender and primary secured creditor and is subject to payment preference because it provided financing to see the company through the bankruptcy process.
Pursuant to the sale agreement, payments to other creditors, whether secured or unsecured, will require approval of the court.
Walrath is scheduled to hold a hearing on 22 May regarding how to address payment allocations and potential claims of a host of actors, including Jennifer Lawrence, Meryl Streep and Brad Pitt, who say they may be owed profit participation from various Weinstein Co. projects.
Although Lantern emerged as the sole qualifying bidder, a company formed by Broadway producer Howard Kagan made a late offer after last week's bid deadline.
Kagan outlined a plan that would have included $25m along with 4 percent of the equity of the company, for a fund for Weinstein's accusers. He also proposed a cash payment of $5m plus 1 percent of the equity in the new company for employees and former employees with claims against Weinstein.
The Weinstein Co. declined to consider the bid, noting that it lacked a purchase agreement, a financing commitment and other requirements for a qualified bid.
Zumbro, the Weinstein Co. attorney, said Tuesday that the Kagan proposal "was never a real offer."
