A Delaware bankruptcy judge on Tuesday approved the sale of the Weinstein Co. to Lantern Capital, a Texas-based private equity fund.
The approval was essentially a formality, given that Lantern was the only bidder that offered to buy the entire company by the April 30 deadline. Lantern offered $310 million in cash, plus the assumption of project-based debt of $115 million. The Lantern offer was set to expire at midnight if the sale was not approved.
The fate of the company has been in doubt since last fall, when the New York Times and the New Yorker exposed decades of alleged sexual abuses on the part of co-founder Harvey Weinstein. Employees have fled the company, and many of its TV and film deals have been canceled or suspended. Lantern has pledged to keep the company going, though its profile is dramatically diminished.
A rival bidder, Broadway producer Howard Kagan, wrote to the Weinstein Co. on May 1, offering to pay $315 million for the company. But the company determined that the offer was not a serious bid as it lacked a deposit, a financing commitment, and other basic requirements. The committee of unsecured creditors, which includes two alleged victims of Weinstein’s sexual misconduct, urged the company to provide more information to Kagan, in hopes of maximizing the value of the bankruptcy estate. But the Kagan offer officially went by the wayside on Tuesday.
It is yet to be determined how much money will be available for Weinstein’s alleged victims. The company had insurance policies with coverage limits of up to $30 million.
An attorney for the unsecured creditors’ committee, Debra Grassgreen, also said that the “headline” sale number of $310 million does not represent the true figure that will be paid into the bankruptcy estate. She said she had been told that after adjustments, Lantern would be paying closer to $260 million. That money may be entirely consumed by paying off secured creditors, leaving nothing for alleged victims or other unsecured creditors, including law firms, vendors and studios.
Lantern is led by Andy Mitchell and Milos Brajovic, two veterans of corporate turnarounds. Neither has entertainment industry experience.
Judge Mary Walrath also granted Harvey Weinstein’s request for some of his business emails, which he has been seeking from the company since his firing last fall. Weinstein wants access to emails between himself and his accusers, in the belief that they will discredit some of the civil claims and criminal investigations that have been launched against him. Walrath agreed that permitting Weinstein access to the emails could help to limit the claims against the bankruptcy estate, thereby maximizing its value to creditors.
Scott Cousins, Weinstein’s attorney, slipped up slightly while arguing that Weinstein has a constitutional right to defend himself, referring to “pre-sentencing” proceedings. Weinstein has not been criminally charged. “I was jumping a little ahead,” Cousins said, to laughter in the courtroom.
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