4:01pm PT by Eriq Gardner
The Weinstein Co. Gets Closer to Suing Harvey and Bob Weinstein
The Weinstein Co. appears to have cleared a big obstacle for suing its former co-chairman Harvey and Bob Weinstein as well as more of the company's former officers and directors. On Tuesday, the debtor submitted revised papers in Delaware bankruptcy court to hire a law firm in connection with anticipated litigation.
Earlier this year, TWC — now under new management — made moves to liquidate its remaining assets, including claims of fiduciary duty breaches against the old board. The law firm of Bernstein Litowitz Berger & Grossmann was lined up to take a case that would allege that Harvey and Bob Weinstein mismanaged the indie studio that unraveled after a sexual misconduct scandal.
But the move to hire special litigation counsel came as some of Harvey Weinstein's alleged sexual assault victims and the New York Attorney General were negotiating with insurers for a global settlement that would resolve most the civil suits in the wake of the film mogul's downfall. These parties objected to the retention of Bernstein Litowitz on the basis that it could interfere with the settlement that they had been negotiating for months.
In June, attorneys leaked word of a potential $44 million deal with the insurers. The N.Y. AG, the Committee of Unsecured Creditors and some tort claimants questioned the plan to hire new lawyers, saying it threatened to blow up the settlement and, as they alleged, waste scarce resources.
An executed global settlement still has yet to be announced. The status of the potential deal isn't publicly known.
Now comes word in court that Bernstein Litowitz will be adjusting its compensation for taking on a case. Perhaps even more notable, the Committee (a group dominated by some of Harvey Weinstein's alleged victims) as well as the U.S. Trustee appears to be on board with this approach.
Formerly, Bernstein Litowitz would have worked on a contingency basis — taking anywhere between 25 percent to 40 percent of recovery in any lawsuit against TWC's former officers and directors. Now, under a revised retention agreement, the law firm is accepting a flat fee of $400,000 for its services.