The Weinstein Co. bankruptcy has now endangered the continued existence of one of its marquis properties: Project Runway. According to reporting in Page Six, A&E Network cancelled its distribution deal with The Weinstein Co. for Project Runway based upon a breach of contract. The television network claims Harvey Weinstein “failed to operate a workplace within the bounds of the law, failed to notify A&E of potential legal claims, and failed to abide by A& E standards and practices.”
Why Is the Loss of Project Runway an Issue?
As one of the premiere series on cable television, A&E’s decision to cancel the next two seasons of Project Runway has the potential to rip away one of the most valuable assets in The Weinstein Co.’s bankruptcy estate. Currently, this Chapter 11 bankruptcy filing is a “liquidation” filing as opposed to a reorganization that would allow the company to reorganize its debts and continue in business.
Given that liquidation is the goal, losing one of the marquis assets could have a substantial negative impact on how much money will be available for the company’s creditors. Unfortunately, this would affect the women with claims against the company arising out of Harvey Weinstein’s serious sexual assaults and misconduct. It appears that significant lobbying has begun to exclude many on-going projects from the bankruptcy estate by claiming unilateral cancellation of contracts with the company. A ruling by the bankruptcy court on the legality of these rescissions will ultimately determine how much property the estate will have to sell to pay creditors.
Progress Made in The Weinstein Co.’s Bankruptcy?
One significant step of progress is that an unsecured creditors committee has been formed in the case. Variety reports that the 5 member committee includes two of Harvey Weinstein’s alleged victims. In Chapter 11, the unsecured creditor’s committee can play a powerful role in the outcome of a Chapter 11 bankruptcy case. The committee is granted substantial power by the Bankruptcy Code to help ensure the “debtor” is either reorganizing or liquidating the estate in a manner that will best serve the creditors. This committee has the authority to pursue claims against third parties in an attempt to bring proceeds into the bankruptcy estate for distribution to unsecured creditors.
The Weinstein unsecured creditor’s committee has hired a heavy hitter in this effort. Pachulski Stang Ziehl & Jones, who labels themselves as the “leading corporate restructuring boutique” has filed a notice of appearance on behalf of the committee. Why is the firm considered a heavy hitter? Because it represented the unsecured creditor committees in several bankruptcy cases associated with the Catholic Church sexual abuse scandal. Ultimately the firm was responsible for reclaiming significant assets for the victims of the abuse. Let’s hope the law firm can bring similar relief to the victims of Harvey Weinstein.
If you are considering a filing for bankruptcy relief and wish to consult with a qualified bankruptcy attorney about your options, please contact one of our locations nearest you in Alabama, Mississippi or Tennessee for a free, confidential consultation.