The Weinstein Company announced plans to file for bankruptcy Sunday evening after talks fell through for a potential sale. Producer and studio co-founder Harvey Weinstein was ousted from the company last October after numerous allegations of sexual harassment and assault from dozens of women who said his abuses had persisted for decades. The Weinstein Company has been struggling financially ever since those allegations came to light, particularly reports from The New York Times and the New Yorker.
The company tried to take out loans from private equity firm Colony Capital to shore up its finance, but those plans fell through, and Colony predicted the Weinstein Company would end up bankrupt. The company then sold its North American distribution rights to Paddington 2, a children’s movie that came out last month.
An investment group, which included Obama administration official Maria Contreras-Sweet and billionaire Ron Burkle, also entered into talks about potentially purchasing in the company. The original deal had been to pay about $275 million and take on $225 million in debt.
On February 11th, New York attorney general Eric Schneiderman sued the company and its founders, the Weinstein brothers, accusing them of “vicious and exploitative mistreatment of company employees.” The suit put a wrench in the sale talks, but Burkle and Contreras-Sweet met with Schneiderman last week to try and salvage the deal.
Contreras-Sweet created a plan to install a female-majority board and establish a dedicated fund for Weinstein’s victims that would include a $10 million line of credit and at least $40 million more from selling off Weinstein Co. film and television projects, anonymous sources told the LA Times. The Weinstein brothers, equity holders, and any people who enabled Weinstein were also not supposed to receive any cash from the sale.
On Sunday evening, the board of representatives at the Weinstein Company wrote a letter to Contreras-Sweet and Burkle, stating that their offer in a recently received “incomplete document” fell below expectations and that the Weinstein Company was better off declaring bankruptcy. The letter says that the offer “unfortunately does not keep [their] promises... You increased the liabilities left behind for the Company, charting a financial path that will fail...in short, the draft you returned presents no viable option for a sale.”
The Weinstein Company’s pariah-like status in the entertainment industry and its subsequent financial woes — as well as investigations into the complicity of other Weinstein executives — demonstrates that accusations of sexual misconduct can have tangible, financial repercussions for abusers and their enablers. Weinstein and his company are not alone, either. The #MeToo movement, which was sparked by the allegations against Weinstein, has lead to career-defining consequences for other men in Hollywood as well. Over the last four months, actor Kevin Spacey was fired from Netflix’s House of Cards, Amazon fired Jeffrey Tambor from Transparent, and Amazon Studios executive Roy Price resigned after allegations of sexual misconduct.