The Weinstein Co. plans to abandon its revised Chapter 11 plan if women with sexual abuse claims against the film production company or its disgraced founder Harvey Weinstein decide to withhold their support of it.
TWC won’t pursue plan confirmation if the creditor class consisting of sexual misconduct claims doesn’t vote to approve the plan, Paul Zumbro, an attorney at the law firm representing the company, Cravath, Swaine & Moore LLP, said Tuesday during a virtual status conference in the U.S. Bankruptcy Court for the District of Delaware.
The creditor class of allegedly abused women essentially gets a right of first refusal for the amended plan, Salah Hawkins, also of Cravath, said at the hearing.
A few of abuse victims are still objecting to the revised plan, including the amount set aside to compensate their claims.
In bankruptcy terms, the debtor is surrendering its right to “cram down” the plan against a non-consenting class, Zumbro said.
The revised Chapter 11 plan carves out $17 million for abuse claimants from a $35.2 million pool to be paid by insurance companies. That’s down from the original deal that would have provided $18.8 million to victims from a $46.8 million pool.
The difference accounts for the insurers no longer providing coverage for acts during the “Miramax era,” Zumbro said, referring to Weinstein’s film production company prior to TWC.
“Even though the money has gone down, it’s a better result for the victims,” Zumbro said.
The revised plan is based on a new settlement reached after Judge Alvin Hellerstein of the U.S. District Court for the Southern District of New York rejected an earlier settlement. Hellerstein is presiding over sex abuse litigation against Weinstein.
Hellerstein objected to a provision in the rejected settlement that called for some insurance proceeds to be dedicated to Harvey Weinstein’s defense costs. The judge called the provision “obnoxious,” according to Zumbro.
The new deal eliminates any funding for Weinstein, Zumbro said.
Skepticism of Plan
Still, the amended plan and settlement received a frosty reception from a few alleged Weinstein victims, including two actresses who earlier asked the bankruptcy court to liquidate the company through a Chapter 7 conversion.
The new plan was “filed in the middle of the night to avoid attention,” Douglas H. Wigdor of Wigdor LLP, an attorney for the women, said in a Sept. 1 statement. It awards too much of the insurance proceeds to Weinstein and “the other ultra-wealthy former directors of The Weinstein Company, as well as TWC creditors including huge media companies and famous actors,” he said.
But the unsecured creditors committee is supporting the revised plan. The deal is “far superior to no settlement at all,” said Robert Feinstein of Pachulski Stang Ziehl & Jones LLP, who represents the committee, which includes sex abuse claimants among its constituency.
Claim Amounts Before Releases
None of the abuse victims would be required to release TWC’s officers and directors, including Weinstein, from liability as part of the plan, Zumbro said.
Victims who agree to the release would receive 100% of their claim amount, as determined by an independent claim administrator, he said. Women who opt out of the releases would receive 25% of the liquidated claim amount and retain their rights to pursue their claims in other courts.
The claimants wouldn’t have to make a decision on the releases until after their claim amounts are determined, which is unusual in Chapter 11 cases, Zumbro said.
TWC will file a motion to approve its disclosure statement later this month, Zumbro said. Approval of the disclosures is necessary before the company can seek votes on the plan.
The case is In re The Weinstein Co. Holdings LLC, Bankr. D. Del., No. 18-10601, status conference 9/2/20.