The Weinstein Co. has agreed to postpone its bankruptcy auction date by two days in order to give creditors more time to evaluate the bids.
At a hearing on Friday, a Delaware bankruptcy judge agreed to schedule the auction for May 4, instead of the original date of May 2. A hearing to confirm the sale was set for May 8, a postponement of four days.
A committee of unsecured creditors — which represents victims of Weinstein’s sexual abuses — had raised concerns about the speed of the sale, saying it could result in a sale for less than the company’s maximum value. At the hearing, Weinstein Co. attorney Paul Zumbro emphasized that a timely transaction is important to maintain the value of the company.
“We need to move quickly in order to preserve our client’s rights and business relationships,” Zumbro said.
The company modified its bid procedures to address other objections raised by interested parties. The U.S. bankruptcy trustee raised concerns about a $15.5 million breakup fee for Lantern Capital, the stalking horse bidder. The fee would be paid to Lantern, a Dallas-based private equity firm, if it does not emerge as the winning bidder.
The trustee objected to the “superpriority” status of the fee — meaning that Lantern would be paid ahead of all other claimants. The Weinstein Co. agreed to reduce the status to “administrative” priority. The creditors’ committee also raised concerns about the amount of the fee. Lantern also consented to cutting the fee to $14 million.
Attorneys for the Weinstein Co. painted a portrait of an indie studio with a lot of potential new owners. Zumbro said that the studio has identified 23 potential buyers and plans to try to drum up interest in advance of the sale. It’s unclear, however, if these would-be buyers are serious in their interest. Of them, only 14 have accessed a data room with financial information about the Weinstein Co. and only three have sent inquiries.
Lantern Capital has offered to buy the company for $310 million cash and the assumption of debt.
An attorney for the guilds, which represent filmmakers and actors who have worked with the Weinstein Co., said they want to ensure that any buyer has the financial means to pay post-sale residuals. A lawyer for the producers of “Hotel Mumbai,” an unreleased Weinstein Co. thriller, also said that his client needed assurances that the stalking horse bidder had the ability to spend an agreed-upon $10 million to promote and release the film. The producers have not received information about Lantern.
The Weinstein Co. has been teetering on the edge of insolvency after news broke that its founder, Harvey Weinstein, had allegedly assaulted or harassed dozens of actresses. Weinstein was fired within days of reports breaking, but the company’s reputation was effectively in tatters. At one point, the studio had a deal in place to sell itself to a group of investors led by billionaire Ron Burkle and former Small Business Administration head Maria Contreras-Sweet, but it collapsed when it was discovered that the studio was carrying more debt than had previously been disclosed.