The Weinstein Company Bankruptcy Delayed 3 Weeks
Colony Capital, a unit of Colony North Star (NYSE:CLNS) has been granted a 3-week window to negotiate a deal for some or all of the Weinstein Company’s assets, as the company seeks to avoid a bankruptcy filing.
The Weinstein Co.’s financial situation, and particularly its debt load, are more dire than was previously known.
Nevertheless, Colony Capital, under the leadership of Tom Barrack, is still working towards some sort of purchase. Colony is said to have reached out to other potential partners to help close the deal.
The Weinstein Co. was not in good financial shape before it was hobbled by the worst sex harassment scandal in Hollywood history.
The company narrowly avoided going bankrupt in Y 2010, when it traded away 200 films in its library to Goldman Sachs (NYSE:GS) and Assured Guaranty in a deal to wipe away $450-M in debt.
Now, the company’s remaining assets are in perilous condition.
Harvey Weinstein is gone, sacked after allegations surfaced that he had harassed or assaulted over 40 women over more than 30 years.
The 40+ women, many of them now high-profile actresses have accused Weinstein of sexual harassment, assault or rape.
He is being investigated by police detectives in Los Angeles, New York and London.
Co-founder Bob Weinstein has also been accused of harassing an employee.
The Weinstein brand is damaged beyond repair, to the point where the company is now exploring a name change.
Several of the company’s projects in development have been canceled, while those that remain are not viewed as surefire commercial successes. Meanwhile, the company faces the potential of massive liabilities associated with future sex harassment claims.
The situation is beginning to resemble the collapse of Relativity Media, which declared bankruptcy in Y 2015 and went through a series of aborted rescue plans and auctions. Today, that company is essentially defunct.
Last Thursday it was reported that Harvey Weinstein is working with billionaire Len Blavatnik and investor Ron Burkle on a purchase plan. Insiders say that they will have to wait at least until Colony’s 3-week window expires to buy the company unless they team with Barrack.
Mr. Burkle was an investor in Relativity.
Internally, work has ground to a halt.
The Weinstein Co. declined to comment.
Have a terrific week.