Weinstein Company inches toward bankruptcy

The studio said it had failed to reach a deal with an investor group led by Maria Contreras-Sweet

(FILES) This file photo taken on December 16, 2013 shows producer Harvey Weinstein attend the premiere of "August: Osage County," at the Regal Cinemas at LA Live in Los Angeles, California.
Disgraced Hollywood mogul Harvey Weinstein's former company has announced on February 26, 2018 it will file for bankruptcy, complaining that talks with frontrunner investors to buy the troubled studio had collapsed, leaving it with "no choice" but to go to the wall. The Weinstein Company said that it had failed to reach a deal with an investor group led by Maria Contreras-Sweet, a former Obama administration official, for a reported $500 million despite a last-minute push to make the deal palatable to New York prosecutors. / AFP PHOTO / ROBYN BECK

Disgraced Hollywood mogul Harvey Weinstein’s former studio appeared to inch closer toward bankruptcy Monday over complaints that talks to buy the troubled production house had collapsed, leaving it with “no choice” but to go to the wall.

The Weinstein Company said it had failed to reach a deal with an investor group led by Maria Contreras-Sweet, who served in Barack Obama's government, for a reported $500 million despite battling to make it palatable to prosecutors.

Ms Contreras-Sweet, a Mexican immigrant who said she had been inspired by the #MeToo sexual harassment watershed in her bid to turn the company around and have it led by women, responded by saying she was “surprised” to learn of its complaints in the press.

“It was my understanding that we were close to signing the transaction documents in a couple of days. Regrettably, it appears that this transaction has now ended,” she said in a statement reported by US media.

It was not immediately clear whether the deal can still be salvaged in some way. Mr Weinstein was sacked as chairman in October after bombshell reports accused him of years of sexual harassment, assault and rape.

Any bankruptcy will cast further doubt on the fate of several finished movies which have languished on the shelf since the scandal blew up, with no release dates announced.

They include historical drama The Current War, starring Benedict Cumberbatch as Thomas Edison, Mary Magdalene, a religious drama starring Rooney Mara and The War With Grandpa, a comedy starring Robert De Niro.

In a letter to Ms Contreras-Sweet on Sunday, Weinstein Company representatives said they had worked “tirelessly” to accommodate principles laid out by New York state attorney general Eric Schneiderman.

The prosecutor sued the firm earlier this month fearing the imminent sale could leave victims of Mr Weinstein's alleged sexual misconduct without adequate redress.

He said any deal should provide adequate compensation for victims, protect employees and remove executives who had been complicit in Mr Weinstein’s misconduct.

In Sunday’s letter, the company complained that Ms Contreras-Sweet’s group had neither kept its side of the bargain on Mr Schneiderman’s principles nor paid interim funding required to run the business and maintain employees before the buyout was finalised.

“We must conclude that your plan to buy this company was illusory and would only leave this company hobbling toward its demise to the detriment of all constituents,” read the letter.

“While we deeply regret that your actions have led to this unfortunate outcome for our employees, our creditors and any victims, we will now pursue the board’s only viable option to maximise the company’s remaining value: an orderly bankruptcy process.

"Over the coming days, the company will prepare its bankruptcy filing with the goal of achieving maximum value in court," it said in a statement.

Mr Schneiderman’s office said it was “disappointed”, given that there had been “a clear path forward” on meeting the guidelines, including a commitment from the buyer “to dedicate up to $90m to victim compensation”.

“We will continue to pursue justice for victims in the event of the company’s bankruptcy,” said director of communications and senior counsel Eric Soufer.

Besides Ms Contreras-Sweet’s investor group, there had been nearly a dozen other bids, including from Qatari group beIN, Hollywood studio Lionsgate and another female-led investor group lined up behind audiovisual production company Killer Content.

Mr Weinstein, whose films received more than 300 Oscar nominations and 81 statuettes, went into career meltdown in October with bombshell exposes in The New York Times and New Yorker.

More than 100 women have since accused him of sexual harassment, assault and rape going back 40 years, leading not only to his career annihilation but to a US reckoning over harassment and abuse that has toppled a litany of powerful men in various sectors.

Jennifer Lawrence, who at 27 is considered one of America’s top actresses, said in an interview broadcast Sunday that when she found out about the allegations, she “wanted to kill him”.

"The way he destroyed so many women's lives. I want to see him in jail," she told CBS television's 60 Minutes.

The twice-married father of five is being investigated by British and US police, but has not been charged with any crime. He denies having non-consensual sex and is reportedly in treatment for sex addiction.