6:15am PT by Eriq Gardner
Weinstein Civil Suits: A Rather Unsettled $44 Million Settlement
On May 23, news outlets created a small firestorm with misleading reports that Harvey Weinstein had reached a "global resolution" on sex abuse claims. Reporters quickly scrambled to follow up on word of a settlement that day at a bankruptcy hearing. In the confusion, actresses including Ashley Judd and Wedil David and attorneys for several other Weinstein accusers quickly disclaimed any deal.
In reality, while both Harvey and Bob Weinstein are nominally part of the agreement in principle, such a settlement is best understood as potentially ending claims put forward in various lawsuits against the former directors and officers of The Weinstein Co. for their alleged complicity in sexual abuse.
For months, the insurers providing the company's directors and officers coverage have been in talks with both the office of the Attorney General of New York as well as the Committee of Unsecured Creditors, a group dominated by some — but not all — of Harvey Weinstein's alleged victims.
If the settlement is completed and then approved (both a bankruptcy judge as well as the overseer of a pending class action would have to greenlight), the deal would take care of a good chunk of Weinstein-related litigation, although hardly all of the cases.
But missed in most of the coverage of the $44 million deal is a potentially more important recent development. The Weinstein Co. itself is not yet on board with this settlement and in fact wishes to pursue its own new claims against Harvey and Bob.
Now under new management including board member Ivona Smith, The Weinstein Co. wishes to liquidate — and the most valuable assets, as the new board sees it, are claims of fiduciary duty breaches against the old board. The debtor has canceled the standing of the Committee to pursue resolution and has lined up a law firm working on contingency to take on a new case in Delaware. The N.Y. AG, the Committee, and some tort claimants oppose measures threatening to blow up the settlement and, as they allege, waste scarce resources.
The money crunch is partly the result of a disappointing bankruptcy auction for films and television shows. Lantern Entertainment — now part of Gary Barber's Spyglass — bought assets for $289 million, far less than insiders had hoped, putting pressure on insurers to cover legal claims.
On June 11, the parties will be back in bankruptcy court to discuss both the liquidation plan as well as a motion to hire the new contingency lawyers (who are compensated via a percentage of any lawsuit winnings). The hearing figures to be a turning point.
If a supposed "global resolution" can't be achieved, not only may there be a new lawsuit, but according to what was stated at the last hearing, the attorney general may amend the old suit to include more defendants.
A version of this story first appears in the June 5 issue of The Hollywood Reporter magazine. To receive the magazine, click here to subscribe.