Weinstein Plaintiffs Seek to Liquidate Bankruptcy Estate
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Two women who allege they were sexually assaulted by Harvey Weinstein have asked a bankruptcy judge to liquidate the Weinstein Co. estate, following the collapse of a global settlement last week.
The women, Dominique Huett and Wedil David, filed the motion in Delaware bankruptcy court. They are represented by Douglas Wigdor and Kevin Mintzer, who opposed the settlement, partly on the grounds that it improperly immunized Weinstein Co. insurers and directors and officers from further liability in sexual misconduct suits.
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They are now seeking to close out the bankruptcy process, which would foreclose the possibility of a revised global settlement and leave each plaintiff to fight her case individually in the civil courts.
U.S. District Judge Alvin Hellerstein rejected the $46.8 million settlement last week, refusing to accept the idea that Weinstein’s victims could obtain payouts through a class action. The deal would have been funded by insurance proceeds, and would have included about $24 million in payouts to sexual misconduct plaintiffs, as well as $12.2 million that would have gone to defense attorneys working for Weinstein and his directors and officers.
The deal would have absolved Weinstein’s directors and the insurance companies of further liability, even for plaintiffs who did not agree to settle.
In the motion, Wigdor and Mintzer argue that continuing the bankruptcy case under Chapter 11 will only consume additional professional fees that should go to plaintiffs and creditors. They also note that the Weinstein Co. sold its assets to Spyglass Media two years ago, and has no operations and no reason to exist other than to settle the pending Weinstein litigation.
They argue that Hellerstein’s decision effectively cuts off the option of funding the settlement through insurance proceeds, and that the best route now is a conversion to Chapter 7.
“The Debtors have had more than sufficient time to formulate a confirmable plan that maximizes recoveries to tort victims,” the attorneys wrote. “They are not able to do so because the Debtors cannot fund the Plan.”
The motion also states that a Chapter 7 trustee could pursue civil claims on behalf of the estate against Weinstein and the company’s directors. Such claims — which have not been filed under Chapter 11 — would accuse Weinstein and the Weinstein Co. board of tanking the company. In theory the claims could expand the pool of funds available to victims.
Paul Zumbro, the lead attorney for the Weinstein Co. estate, said the estate would have to assess the effect of Hellerstein’s ruling.
The Weinstein Co. estate itself filed a motion to convert the case to Chapter 7 in May 2019, when it appeared that the settlement talks had stalled. That motion was tabled once it appeared that the talks were progressing.
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