Weinstein Company Faces ‘Instant Bankruptcy’ if Current Bidder Withdraws

Attorney General’s lawsuit has put TWC sale “in jeopardy,” insider says

If Maria Contreras-Sweet abandons a bid to buy the Weinstein Company because of a lawsuit from the New York Attorney General’s office, the company will likely file for “instant bankruptcy,” a knowledgeable insider told TheWrap.

Contreras-Sweet, the former Small Business Administrator under Barack Obama, had seemed like a potential savior who could rescue the company from the wreckage of the Harvey Weinstein scandal. Her proposed cleanup plan included a majority-female board of directors, a new name and a multimillion-dollar fund for Weinstein’s many accusers, TheWrap previously reported.

But a lawsuit filed Sunday by New York State Attorney General Eric Schneiderman has jeopardized what seemed to be a done deal, two insiders close to the transaction said. A potential withdrawal would result in “instant bankruptcy” for what remains of the studio and its 157 employees, one of the individuals added.

Schneiderman, a potential candidate for governor, threw serious fire at TWC’s current board and executive leadership — calling them “complicit” in Weinstein’s misconduct and saying Contreras-Sweet’s bid would “reward” executives. President David Glasser would become CEO, TheWrap reported.

Schneiderman noted that no victim fund currently exists, though numerous people from different sides of the deal said $50 million had been set aside to create one, and that Contreras-Sweet personally contributed $20 million.

An individual familiar with Contreras-Sweet’s thinking said she remains “100 percent” committed to pursuing her plan, but that she could not talk to Schneiderman prior to his filing because of a nondisclosure agreement tied to the negotiations.

“Maria couldn’t lay out her plan for a company that’s welcoming to women and led by women,” a second individual said.

Representatives for Contreras-Sweet, Glasser and Schneiderman did not immediately return requests for comment.

But Schneiderman’s lawsuit has “put the deal in jeopardy,” one of the insiders said. Schneiderman and Contreras-Sweet are expected to discuss her plans, but she is not willing to go above her current offer, the two insiders said.

Schneiderman’s suit does not block the sale, but the attorney general’s office can file a temporary restraining order blocking it within 30 days of the sale contract being signed.

“You’ve got this huge mess, and now the political sphere is invading an existing legal issue. It’s throwing a monkey wrench into a complicated and sad situation,” commercial and civil litigator Joseph Balice of Brutzkus Gubner told TheWrap.

Balice said that in the event of a lost bid, TWC could liquidate assets to stay afloat by selling off another finished film — as the company did with “Paddington 2,” which fetched north of $20 million in emergency funding to keep the lights on as the number of accusers soared. (It now stands at more than 80 women.)

“Bankruptcy depends on what revenue streams they have that can be liquidated. Some buyers might be more interested in those assets, especially at bankruptcy prices,” Balice added.

TWC currently has a robust TV slate that includes library titles like “Project Runway.” The TWC and TWC-Dimension slate includes titles like Robert De Niro’s “War With Grandpa” and Benedict Cumberbatch’s “The Current War.” The company also has the right to adapt Lin-Manuel Miranda’s Tony-winning musical “In The Heights,” with the Tony winner attached to star.