Forecasting Weinstein Bankruptcy, Lender Cries Default

Hollywood producer Harvey Weinstein is pictured here at the 25th anniversary screening of “Reservoir Dogs” on April 28, 2017, during the Tribeca Film Festival in New York. (Photo by Charles Sykes/Invision/AP, File)

MANHATTAN (CN) –  Demanding repayment of $44 million by the Weinstein Co., a lender claims in court that the Hollywood powerhouse defaulted on the loan the second that it fired scandal-plagued Harvey Weinstein.

“Weinstein’s termination and the events leading to and surrounding that termination have left the business of Weinstein Holdco and its affiliates in shambles,” AI International says in a Nov. 10 complaint, using an abbreviation for the holding company that guaranteed AI’s loan to a Weinstein affiliate.

AI brought its complaint in Manhattan Supreme Court, with help from Quinn Emanuel attorney Richard Weder Jr. The British Virgin Islands-based outfit says immediate repayment of the loan is necessary after Weinstein’s business “dramatically imploded as a result of a massive, public scandal involving its founder and now-former senior leader.”

Though Weinstein denies the allegations against him, he was fired immediately from his production company on Oct. 8, 2017, “following published accounts in which several women accused him of sexual harassment and rape,” the complaint states.

AI says a bankruptcy filing by the production company is imminent.

“For all intents and purposes, there is no Weinstein Company apart from Mr. Weinstein,” the complaint states, quoting an industry insider.

AI points to published reports indicating that some individuals on the board of directors at Weinstein Holdco were aware since at least 2015 of settlements that Weinstein had reached with certain accusers.

“At least one media source has reported that the directors approved a 2015 contract that contemplated future sexual harassment or assault allegations against Weinstein, and his opportunity to cure allegations of such conduct by paying a modest fine to the company,” the complaint states.

In addition to lawsuits from victims stepping forward, Weinstein’s former company also faces an investigation by the New York attorney general that could carry additional liability.

Weinstein is suing Weinstein Holdco, as well, “noting among other things that the company’s co-founder, his brother Robert Weinstein, is also accused of ‘similar improper conduct,’” according to the complaint.

AI describes the departures of various business partners, board members and creative talent from Weinstein Holdco in the fallout of the scandal as an “exodus.”

“Amazon is reported to have pulled the plug on a major television deal, and Weinstein Holdco’s ability to move forward with new projects has significantly diminished,” the complaint states.

AI notes that Weinstein Holdco needs “tens of millions of dollars” to keep itself afloat.

The money is not likely to come, according to the complaint, which quotes dire predictions from knowledgable investment bankers.

“Nobody will touch this company with a 10-foot pole,” one individual quoted in the complaint said.

The promissory note issued to Weinstein’s affiliate on Sept. 29, 2016, was worth $45 million, but AI puts the outstanding balance at about $44 million.

AI International’s 15-page complaint filed Friday in New York County Supreme Court concerned repayment of a 2016 promissory note worth $45 million to a borrower guaranteed by Weinstein Holdco and Harvey Weinstein.

A representative for Harvey Weinstein with Sitrick and Company declined to comment on the complaint. The Weinstein Company has not returned a request for comment.

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