The Weinstein Co. revived a deal to sell its assets to a group of investors who want to transform the scandal-plagued film studio into a female-led entertainment venture, the latest twist in the company's tortured efforts to avoid bankruptcy following the downfall of Hollywood mogul Harvey Weinstein.
The company's announcement Thursday marks a swift and dramatic reversal of fortunes. It came just four days after the Weinstein Co. announced it would file for bankruptcy protection, saying negotiations had fallen apart with the group led by businesswoman Maria Contreras-Sweet and billionaire investor Ron Burkle. But the two sides soon returned to talks, along with New York State Attorney General Eric Schneiderman, who filed a lawsuit against the company three weeks ago that threw a wrench in the deal.
A bankruptcy protection filing would have halted lawsuits filed by women who have accused Harvey Weinstein of sexual harassment, assault and other misconduct. The sale deal includes a commitment from the buyers to establish a compensation fund of up to $90 million for Weinstein's accusers. Weinstein has denied all allegations of assault.
"The deal provides a clear path for compensation for victims and protects the jobs of our employees," the Weinstein Co.'s board of directors said in a statement. "We consider this to be a positive outcome under what have been incredibly difficult circumstances."
Contreras-Sweet said the deal would save about 150 jobs and protect the small businesses that are owed money by the studio. She said she would "launch a new company that represents the best practices in corporate governance and transparency."
Schneiderman said in a statement that he was pleased that the deal would "create a real, well-funded victims compensation fund, implement HR policies that will protect all employees and will not unjustly reward bad actors."
He said his office would work with the two sides to ensure they honor their commitment and that his lawsuit and investigation into the Weinstein Co. remain active.
The announcement came after Contreras-Sweet and Burkle met with the company's co-founder, Bob Weinstein, at Schneiderman's office, according to several people familiar with the negotiations.
A person familiar with the negotiations said the two sides agreed to a 40-day closing process. The person said the deal includes financing for the Weinstein Co. to meet payroll, rent and other financial obligations while the sale is being finalized.
The buyers would pay $220 million for most of the Weinstein Co. assets and assume about $225 million of the studio's debt. The new company would also dedicate $90 million to compensate Harvey Weinstein's accusers, including $60 million put up by the buyers and $30 million from insurance proceeds. The person also said the buyers intend to retain company's approximately 150 employees, though personnel decisions will be made later in the process.
The people declined to be identified because they were unauthorized to speak publicly about the private talks.
Contreras-Sweet's proposal has emerged as the Weinstein's Co.'s best chance to remain mostly intact, although under new leadership and with a different name. Contreras Sweet, who headed the small business administration during the Obama administration, has no previous entertainment experience but her proposal beat out several other prominent bidders who were mostly interested in buying parts of the company out of bankruptcy.
She has proposed remaking the company into a women-led venture, with a female-majority board of directors. But Schneiderman objected to the deal out of concerns that there insufficient documentation guaranteeing compensation for the victims. He also said the deal would potentially keep in place top executives accused of enabling Weinstein's alleged abuse of the company's female employees.
The lawsuit launched three weeks of fraught, behind-the scenes talks to revive the sale, with several unreleased films hanging in the balance, including the Thomas Edison tale "The Current War," with Benedict Cumberbatch, and "Mary Magdalene," starring Rooney Mara.
Days after Schneiderman's lawsuit, the Weinstein Co. fired its president and former COO, David Glasser. Contreras-Sweet's group, in private talks with the attorney general, ironed out a deal to alleviate his concerns, including setting the $90 million compensation fund.