The Weinstein Co. bankruptcy estate has offered a new settlement proposal that would reduce the payout to Harvey Weinstein’s sexual misconduct victims by $7.2 million.
Under the new terms, Weinstein’s victims and their attorneys would receive $17.1 million — down from $24.3 million in a deal that was rejected in July.
The bankruptcy professionals are scrambling to salvage the global settlement that was torpedoed by Judge Alvin Hellerstein’s ruling that the sexual harassment and assault case was not suitable for a class action.
The Weinstein Co. estate is now hoping to go around Hellerstein and obtain a global settlement that would need approval only from Judge Mary Walrath, the Delaware judge who has been overseeing the bankruptcy case for the past two years.
The revised proposal, filed early on Tuesday, reflects the weakened negotiating position of the Weinstein plaintiffs in the wake of Hellerstein’s ruling. The original proposal set aside $18.9 million for a class action settlement fund, and $5.4 million for individual plaintiffs.
But without the ability to obtain class action status, the total payout to all Weinstein plaintiffs has been slashed to $17.1 million.
Weinstein left Miramax in 2005 to form the Weinstein Co. The original class action settlement included payouts to a “Miramax subclass” and a “TWC subclass,” depending on when the alleged misconduct occurred. The revised settlement excludes any claims arising from the Miramax era. Hellerstein had previously dismissed those claims as falling outside the statute of limitations, and they are now not part of the deal. Instead, those plaintiffs will have to pursue an appeal of Hellerstein’s dismissal.
The new proposal cuts the total settlement amount from $46.8 million to $35.2 million. All payouts would come from the Weinstein Co. insurers.
The amended settlement reduces the payout for defense costs incurred by the Weinstein Co. officers and directors from $12.2 million to $9.7 million. The revised terms exclude any payment to cover Harvey Weinstein’s defense costs, but would continue to cover costs incurred by his brother, Bob Weinstein, and the other directors and officers.
Another $8.4 million would be set aside for trade creditors, up from the $7.3 million in the original deal.
Several Weinstein plaintiffs opposed the original settlement, on the grounds that Weinstein Co. insurers and directors would be immunized from any further liability. Those plaintiffs will continue to oppose the revised deal, and it’s not clear whether Walrath will approve it.
In a statement on Tuesday, attorneys Douglas Wigdor and Kevin Mintzer, who represent three of the non-settling plaintiffs, said that the new plan “is more offensive than the version that was rejected by Judge Hellerstein.”
“Less than half of the settlement funds are designated for sexual assault survivors, and that amount will substantially dwindle to pay the costs of administering the settlement,” the attorneys said. “The awards to survivors, therefore, will likely be miniscule.”
The committee of unsecured creditors, which represents Weinstein’s sexual assault victims and trade creditors in the bankruptcy case, supported the original settlement, but did not sign on to the revised version.
Beth Fegan, the class action attorney who represents plaintiffs who still want a deal, said the revised version would spare many women years of litigation.
“I find it troubling that a small number of detractors are attempting to derail a settlement that would help a larger group of survivors who are interested in resolution now rather than after years of additional trauma,” Fegan said in a statement. “Those detractors have already pulled the rug out from the Miramax-era survivors’ ability to settle at this juncture. Under this plan, women from The Weinstein Company-era have an individual choice to participate in the revised deal or continue to pursue Harvey Weinstein separately. Most important, we believe this proposed agreement allows every woman to make a decision for herself, and we will not allow one squeaky wheel to rob the survivors who are interested in resolution of their independent choice.”
A status hearing has been set for Wednesday to update the court on the new terms.
Wigdor and Mintzer are seeking to force the Weinstein Co. estate into liquidation, arguing that will provide a greater recovery for Weinstein plaintiffs.