The US$500 million deal that would have rescued The Weinstein Company (TWC) from bankruptcy has collapsed after hidden debts were allegedly found.
With the investor group that Maria Contreras-Sweet pulling out, TWC has no option but to head into bankruptcy proceedings.
“All of us have worked in earnest on the transaction to purchase the assets of The Weinstein Company,” said Contreras-Sweet. “However, after signing and entering into the confirmatory diligence phase, we have received disappointing information about the viability of completing this transaction. As a result, we have decided to terminate this transaction.”
According to AFP, US$64 million in undisclosed liabilities had been discovered as the investors went through the books.
However, TWC’s board refuted debts had been hidden. “The investors’ excuse that they learned new information about the company’s financial condition is just that — an excuse,” the board said in a statement.
“The company has been transparent about its dire financial condition to the point of announcing its own likely bankruptcy last week. We regret being correct that this buyer simply had no intention of following through on its promises.”
The development brings an end to Contreras-Sweet’s on-off deal to buy the TWC assets. New York attorney general Eric Schneiderman had put the first spanner in the works when he blocked an initial agreement over fears victims of Harvey Weinstein would not be properly redressed through the deal.
However, new measures followed, and the deal was back on. COO and president David Glasser left around that time and is now reportedly looking to sue over his dismissal.
Contreras-Sweet said she and her backers may look at acquire TWC assets through a bankruptcy auction.
“I believe that our vision to create a women-led film studio is still the correct course of action,” she said.
“To that end, we will consider acquiring assets that may become available in the event of bankruptcy proceedings, as well as other opportunities that may become available in the entertainment industry.”
TWC’s fortunes took a massive downturn when stories about Harvey Weinstein’s abuses of power and sexual behavior emerged last year.
Weinstein (pictured) is currently being investigated for multiple allegations of sexual assault and rape in the UK and US, but has not been charged. He denies all allegations, though has apologized for causing hurt.
TWC has coproduced series such as War and Peace and owns the rights to reality format Project Runway.
January 2018 – Reports suggest plans are underway to rebrand the now-toxic TWC name
Former President Obama staffer Maria Contreras-Sweet and an investment group including financier Ron Burkle fight off competition to near a US$500 million Hail Mary deal for TWC. She plans to turn it into a female-led operation
February 2018 – The New York Post reported Contreras-Sweet was pulling out of the deal after becoming frustrated with New York attorney general Eric Schneiderman insistence of monitoring her new look board
David Glasser is removed from his president and COO, a move that preceded Contreras-Sweet’s deal getting back on the table
March 2018 – Measures taken to get the deal restarted are accepted, meaning TWC avoids bankruptcy
The new investors claim to find hidden debts and pull out. TWC heads for bankruptcy