May 8, 2018 / 8:17 PM / 4 months ago

Weinstein Co sale approved, funds for abuse claims unclear

WILMINGTON, Del, May 8 (Reuters) - An affiliate of Lantern Capital received approval from a U.S. bankruptcy judge on Tuesday to buy the assets of the Weinstein Co, but the price may leave little for those who alleged sexual harassment by founder Harvey Weinstein.

Lantern Entertainment was the only bidder for the company, which filed for bankruptcy after more than 70 women came forward accusing Weinstein of sexual misconduct, including rape.

He has denied having non-consensual sex with anyone.

The Weinstein Co described Lantern’s bid as $310 million in cash, with assumption of $127.2 million of secured debt.

An attorney for the official creditors committee said the actual purchase price, after adjustments, was going to be closer to $260 million.

“That doesn’t leave enough money for the all the creditors,” Debra Grassgreen, a Pachulski Stang Ziehl & Jones attorney who represents the creditors committee, said at Tuesday’s hearing. She said the best hope for money for harassment plaintiffs may come from litigation, rather than the sale.

Lawyers for the Weinstein Co will begin the process of determining how to divide the funds raised from the sale of the assets, which includes films such as “Silver Linings Playbook” and the “Project Runway” television franchise.

Secured creditors get paid before general unsecured creditors, which includes claims for harassment. The company said it had about $345 million in secured debt when it filed for bankruptcy, includes the debt Lantern is assuming.

Gloria Allred, who represents harassment plaintiffs, told Reuters on Sunday she doubted the bankruptcy process would leave enough money to pay all harassment claims.

She said had supported a deal led by former Obama administration official Maria Contreras-Sweet, who planned to compensate victims even if their claims were outside the statute of limitations.

That deal collapsed in February after New York’s Attorney General Eric Schneiderman sued the company, making the bankruptcy inevitable. Schneiderman, who announced a surprise resignation on Monday, had said he wanted to ensure harassment plaintiffs would be compensated and employees of the company protected.

Schneiderman’s resignation followed allegations of physical abuse by four women reported in the New Yorker magazine. Schneiderman said he contested the allegations.

Pamela Foohey, a professor at the Mauer School of Law, said compensation for harassment plaintiffs is important, partly because it signals the seriousness of their experience but it was also important they get a chance to tell their story in court. (Reporting by Tom Hals in Wilmington, Delaware; additional reporting by Lisa Richwine in Los Angeles and Jessica DiNapoli in New York; Editing by Cynthia Osterman)

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