10:37am PT by Eriq Gardner
Weinstein Co. Reaches $2.5M Settlement With DVD Distributor Once Run by Steve Bannon
The Weinstein Co. has resolved one of its longest-running legal disputes: a fraud lawsuit over whether Harvey Weinstein's studio used Steve Bannon's former company as a piggy bank. On Thursday, a bankruptcy judge was presented with a $2.5 million settlement to approve.
The relationship between Weinstein and Bannon, Donald Trump's former political adviser, dates at least as far back as 2005, when Weinstein was searching for new financing after separating from Disney. Eventually, Genius Products became a distributor in the home entertainment market for The Weinstein Co. At first, the company chaired by Bannon operated as a subsidiary for TWC until a restructuring where Genius was held out as an independent company.
In a lawsuit from Alfred Siegel, the Chapter 7 Trustee of Genius Products, that independence was alleged to be a "sham that was intended to and did mislead third parties."
About a decade ago, Genius began distributing works from the WWE, ESPN, Discovery and others. But according to Siegel's complaint, Genius had become insolvent while living with an "onerous and one-sided" distribution deal from TWC. As such, according to the complaint, Genius used proceeds from those other entertainment companies "to make transfers to Weinstein and pay overhead expenses, thereby turning the third party licensors into unsecured creditors who were not paid timely."
Siegel attempted to recover $130 million as fraudulent transfers.
But then, sexual misconduct allegations against Harvey Weinstein surfaced, leading to a halt of the proceedings and talk that Genius was "almost certainly the largest unsecured creditor of TWC."
That's likely not true.
Seeking $130 million, Siegel will recover just $2.5 million. National Union Fire Insurance will be the one making the payment. According to the terms of the settlement, the insurer will also pay defense costs for TWC.
Interestingly, the settlement agreement expressly doesn't provide a release for "harassment claims," defined to include pretty much sexual misconduct of any kind against officers of both TWC and Genius.