A slew of A-list stars are raising objections to the Weinstein Co. bankruptcy sale, out of fear that they will see only a tiny fraction of their backend profit payments from Weinstein films.
The company hopes to win court approval for the sale to Lantern Capital on Wednesday and close the deal on Friday, just two days before its bankruptcy financing expires. Quentin Tarantino, Brad Pitt, Meryl Streep, Julia Roberts, George Clooney, Leonardo DiCaprio, Rachel McAdams, Bill Murray, and many others filed objections to the sale on Monday.
Each claims that he or she is owed profit participation payments from various films. The stars’ attorneys are raising concerns about a deal reached last Friday between the Weinstein Co., Lantern, and the committee of unsecured creditors. A provision of the agreement gives Lantern another four months after closing to determine which Weinstein Co. contracts to assume. The remaining contracts will be relegated to the Weinstein Co. estate and would be treated as unsecured liabilities. In that case, the stars would likely receive little if any money.
The company and Lantern Capital have been arguing for the last month over who is responsible for such payments, a conflict that nearly scuttled the sale. In the agreement, Lantern agreed to assume some — though not all — of the “cure” payments for contracts that remain to be settled. Lantern agreed to pay at least $8.75 million in cure payments, but has yet to determine which contracts it will take. In exchange, the Weinstein Co. cut the sale price from $310 million to $289 million.
That agreement has left those with unresolved contracts in limbo. In Tarantino’s case, the director claims he is owed $4.3 million in unpaid royalties and profit participations. His attorneys say they have been seeking a resolution with Lantern and the Weinstein Co. for the past two months, without success. Christopher Simon, an attorney who represents Streep, Pitt, Clooney, Murray, McAdams, and others, argues that Lantern is likely to leave the Weinstein Co. holding the bag, diluting the payout to the company’s many other creditors.
“Lantern has not shown any willingness to pay, or even negotiate the claims of Counterparties, and instead appears to favor continuing litigation by the Debtors against the Counterparties at a substantial cost to the estates,” Simon argues.
Simon contends that giving Lantern “carte blanche” in the matter violates bankruptcy law, and “could result in the imposition of millions of dollars in administrative and unsecured liabilities to the Debtors’ estates.”
Attorneys for the Weinstein Co. have said they have engaged in negotiations with about 100 contract counterparties over the last few weeks. Some of the disputes have been settled.
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