11:15am PT by Eriq Gardner
Weinstein Co. Won't Be Auctioning Off Legal Claims Against Bob and Harvey Weinstein
For financial speculators looking to acquire some standing to sue Harvey and Bob Weinstein, some bad news. On Friday, at a hearing in Delaware Bankruptcy Court, it was revealed that a coming auction for Weinstein Co. assets won't include the sale of legal claims against Weinstein Co. insiders.
The Weinstein Co. filed for Chapter 11 bankruptcy on March 19 after the film and television studio came apart in the wake of news stories about Harvey Weinstein's alleged sexual misconduct. Lantern Asset Management will provide a $310 million stalking horse bid to acquire the debtor's assets, and at a hearing today, a bankruptcy judge indicated she will approve bidding procedures.
After various objections were resolved through negotiation, an attorney for the debtor walked Delaware Bankruptcy Judge Mary Walrath through the changes.
Most amendments to the bidding procedures were minor, including pushing back the date of the auction two days to May 4. To satisfy the U.S. government, it has also been resolved that anyone can attend the auction.
The various changes appear to be non-controversial, too.
No one is objecting to any mismanagement claim not being included in the sale. Although an auction of legal claims might sound odd, it's not unprecedented. For example, the bankruptcy estate of Gawker is currently exploring selling its potential legal claims against Silicon Valley billionaire Peter Thiel.
The coming Weinstein Co. auction is nevertheless generating interest.
The judge was told that 23 potential buyers have come forward, including seven who had not indicated any interest before the filing of the bankruptcy petition three weeks ago.
Perhaps most significantly, and certainly the topic that generated the most discussion at today's hearing, is how bidders will be required not only to indicate what they are willing to pay for hundreds of TV and film works, but also how they allocate value among the assets. This will help determine the winning bid, or maybe, the winning bids — with the possibility that assets are divided.
Several parties have reserved rights to object to the sale of certain assets. For example A+E revealed in court papers this week that it had canceled its contract for Project Runway and is warning buyers not to assume a broadcast deal is included in the auction.
The Weinstein Co. lawyer said today, "The debtors do not dispute that they can't transfer what they do not own, but what they own is not presently at issue today."