Harvey Weinstein Plaintiffs Oppose TWC's Move to Hire More Lawyers

In the bankruptcy proceedings, The Weinstein Company Holdings is asking for permission to hire special litigators in connection with potential claims against TWC directors and officers. It also wants to convert from Chapter 11 to Chapter 7 because it's running out of funds.
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Harvey Weinstein

The Weinstein Co.'s debtors are asking the judge to let them hire a litigation firm in potential claims against the defunct studio's former directors and officers amid opposition from New York's Attorney General and a myriad of people suing Harvey Weinstein.

TWC's debtors on May 1 asked federal bankruptcy judge Mary F. Walrath for the green light to retain Bernstein Litowitz Berger & Grossman as special litigation counsel. 

As part of the bankruptcy, the parties met in confidential mediation to address claims arising from Weinstein's alleged sexual misconduct. That mediation still hasn't produced a "consensual resolution," according to the filing. According to an engagement letter attached as an exhibit to a May 1 filing, BLBG is being hired to represent TWC and its debtor affiliates “in connection with litigation (including arbitration) arising from breaches of contract, breach of fiduciary duty and other misconduct of former Co-Chairmen Harvey and Robert Weinstein, as well as certain of the Debtors’ former officers and directors and other representatives or employees” which contributed to the bankruptcy filing.

The firm will be paid on a contingency-fee basis and receive 25 percent of any monetary recovery if the dispute is resolved within six months of giving the execs notice of the intent to mediate or arbitrate, and 30 percent if it take longer than six months. If the TWC debtors accept a settlement without the firm's consent, it gets at least 40 percent. TWC ensured the bankruptcy judge that BLBG's fees are fair and that its services wouldn't overlap with any of the other firms it has hired so far, which include Cravath, Swaine & Moore, Richards, Layton & Finger, Seyfarth Shaw and several financial advisors.

Both the New York Attorney General, joined by women suing Weinstein, and the committee of unsecured creditors on Wednesday filed oppositions to the request. 

The AG contends that JAMS mediator Jed Melnick has conducted 11 separate mediation sessions, dozens of telephone conferences and countless emails with the various parties and is very close to guiding them through a resolution. 

"Having spent a year trying to reach a mediated settlement that would resolve all of the claims, the Objecting Parties, believe that the parties are literally days away from receiving a proposed global resolution for the benefit of the estate and unsecured creditors, that would include both remuneration for Harvey Weinstein’s sexual abuse victims and also a proposed recovery to the estate (excluding the tort victims)," writes attorney Jeffrey Waxman.

The AG's office and Weinstein plaintiffs argue that letting TWC hire the new lawyers threatens to "undermine" their progress, potentially "wasting years of protracted litigation" and further depleting financial resources — at a minimum by the 30 percent cut the firm would take. 

Waxman argues if the request to retain BLBG isn't denied, at the very least the court should put off the hiring for 30 days to give the parties time to mediate. The committee of unsecured creditors agrees the hiring of special litigation counsel is premature and asked that the hearing on the matter be moved to June 4, when the court is scheduled to hear TWC's motion to convert the cases from Chapter 11 to Chapter 7.

In that motion, which was filed Tuesday, TWC Holdings argues that it is running out of funds and the claims against the former directors and officers are "among the few remaining assets of their estates that have significant potential value."

"With no remaining operating business and mounting administrative costs, the Debtors have considered the alternatives for concluding these bankruptcy cases," writes attorney David Querioli. "As the Debtors’ principal remaining task is the pursuit of potential litigation, the Debtors believe that such task can be accomplished by a chapter 7 trustee and that the estates can do so without the expense and cost of a chapter 11 plan process."