Bankruptcy Judge Approves Weinstein Co. Liquidation After Three-Year Odyssey & Last-Ditch Protest By Handful Of Victims
A bankruptcy court judge Monday confirmed a liquidation plan for the former Weinstein Co., which filed for Chapter 11 three years ago as disgraced mogul Harvey Weinstein imploded in a sea of sexual abuse and harassment accusations.
Weinstein the man is currently serving a 23-year sentence for rape and assault at a correctional facility in upstate New York. The assets of his company were sold to a private equity firm with proceeds going to secured creditors. A group of unsecured trade creditors and Weinstein victims and their attorneys have been arguing over how divide what’s left, basically settlement money offered by insurance companies.
After years, earlier this month, a large majority of both agreed to accept the latest proposed settlement that includes $17 million for a sexual misconduct claims fund that will be divided among the women, and another $8.4 million for other bankruptcy claims.
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“The mess that Harvey Weinstein left behind has been very hard to clean up,” said attorney for the estate Paul Zumbro in his opening statement, insisting the agreement was the best compromise available to make sure all parties received some compensation.
Four abuse victims objected to the settlement, which would require them to release all future claims against Harvey Weinstein and former officers and directors of his company, including brother Bob Weinstein. They do have the option of accepting a lower payout — 25% of what they’d be entitled to, payout and still retain the right to go after Harvey in court, but no one else.
U.S. bankruptcy Judge in Delaware, Mary Walrath noted that “83% of Weinstein’s victims have expressed very loudly that they want closure through acceptance of this plan, that they do not seek to have to go through any further litigation to receive some recovery, some possible recompense for what was done to them, although it is clear that money alone will never give them that.”
“But I can only deal with the financial aspect of this and the bankruptcy code says that creditors should decide as a class how they want their claims to be treated,” she said, rendering her decision at the end of a two and half hour hearing.
Some 48 people with sexual misconduct claims cast ballots with 39 backing the deal. Four actively objected. Bob Weinstein, who had been co-CEO, came up a lot. Kevin Mintzer, an attorney for the objecting victims, said he was particularly complicit in his brother’s crimes but would be protected by the plan. Cases against Bob Weinstein have been by trial judges, he noted, but not by appellate courts. “If this settlement is approved, no one will get a chance to ever review these Robert Weinstein cases,” he said.
Mintzer also argued that insurers could have been pushed further to sweeten the pot if the current plan was scrapped.
Under the approved plan, Harvey Weinstein waived claims of coverage for all of his legal defense costs. Other former officers and directors of the company waived 50% of of legal cost claims they would technically have had the right to before any other insurance claims were paid out.
“I do not accept that if everyone went back to the drawing board that there would be additional recovery, or substantial additional recovery. I accept that the parties have negotiated in good faith,” said Judge Walrath.
The objectors’ attorneys also called it unfair that that their clients, some of whom are rape victims, had the same standing in approving the plan as others who may only have suffered verbal abuse.
“I will not enter into whether one victim’s claim is more [valid] than another’s — that is going down a rat hole. If they chose not to release Mr. Weinstein, they have the right to go to a jury trial,” the judge said.
Harvey Weinstein is appealing his February, 2020 conviction in New York and faces 11 felony charges in Los Angeles, including for rape and sexual battery, pending an extradition that is now on hold.
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