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Weinstein Company Sale Collapses After $50 Million Liability Curveball

Maria Contreras-Sweet pulls out after diligence uncovers expected profit participants

The Maria Contreras-Sweet Group has called off its purchase of The Weinstein Company. Again.

The revelation of a $50 million liability “out of the blue” led the bidders to withdraw from the sale, an individual with knowledge of the deal told TheWrap on Tuesday after the proposed $500 million deal collapsed. The multimillion dollar sum is owed to profit participants on TWC’s upcoming movies, the insider said, though it’s unclear which titles.

“It was the straw that broke the camel’s back,” said the individual.

Contreras-Sweet said she had “disappointing information about the viability of completing this transaction,” in a statement on Tuesday, saying her team and investors, including Ron Burkle, “worked in earnest” throughout a dramatic and ultimately ineffective sale process.

Only five days ago, Contreras-Sweet trumpeted that she found a way to purchase almost all TWC’s assets and avoid a bankruptcy process — which is now likely the studio’s only option in the wake of the devastating Harvey Weinstein sexual assault scandal, TheWrap previously reported.

Contreras-Sweet said she would be open to acquiring some of the company in a Chapter 11 sale.

Last Thursday, the Contreras-Sweet Group proudly touted it had found a satisfactory deal to purchase almost all of TWC’s assets, despite a dramatic tug of war that involved a lawsuit from New York’s attorney general and a Chapter 11 threat from the existing TWC board.

In a statement at the time, Contreras-Sweet said she and other investors shared principles that “never wavered and have always been to build a movie studio led by a board of directors made up of a majority of independent women, save about 150 jobs, protect the small businesses who are owed money and create a victims’ compensation fund.”

The fund, of course, would  have compensated the many accusers of former CEO Harvey Weinstein, who was named in over 80 accounts of rape, sexual harassment and abuse.

A sale amount was not immediately disclosed, though the investors had been exclusively negotiating for the company at a $500 million price –half of it cash, and the other half an assumption of the studio’s existing debt.

Read the full announcement:

All of us have worked in earnest on the transaction to purchase the assets of The Weinstein Company. However, after signing and entering into the confirmatory diligence phase, we have received disappointing information about the viability of completing this transaction.

As a result, we have decided to terminate this transaction.

I would like to thank the employees and the board of The Weinstein Company for pursuing this opportunity with us and Attorney General Eric Schneiderman for playing a crucial role at a critical time. I especially want to thank Ron Burkle and The Yucaipa Companies for their advice, showing faith in this deal, and taking an unusual step of subordinating many typical investor board rights to the women who would have led this company. I would like to thank Lantern Asset Management for their early capital commitment and Len Blavatnik for his willingness to look at creative options on the debt side. Lastly, I would like to thank Tarak Ben Ammar.

I believe that our vision to create a women-led film studio is still the correct course of action. To that end, we will consider acquiring assets that may become available in the event of bankruptcy proceedings, as well as other opportunities that may become available in the entertainment industry.

I remain committed to working to advance women’s business ownership in all sectors and to inspire girls to envision their futures as leaders of important companies.

Sharon Waxman contributed to this report.