A $500 million deal to sell Harvey Weinstein's troubled old studio to former Obama administration official Maria Contreras-Sweet hit a major roadblock this weekend after the New York attorney general's office expressed concerns about the sale, according to a person familiar with the matter.
Contreras-Sweet, backed by billionaire Ron Burkle's Yucaipa Cos., has been in negotiations with the Weinstein Co. for weeks for a deal that would give her control over the studio's assets and establish a fund to help women who say they were abuses by Weinstein.
A deal was expected to be signed Sunday, ending a protracted search for a buyer four months after sexual harassment and assault allegations against Weinstein sent the New York-based company into a tailspin. Authorities in Los Angeles, New York and London have begun criminal investigations of the allegations against Weinstein. He has denied claims that he engaged in nonconsensual sex with women.
New York state Attorney General Gen. Eric Schneiderman, whose office began a civil rights investigation into Weinstein Co. in October, has been making moves to intervene in the process, according to people familiar with the matter.
The New York Daily News reported Saturday that Schneiderman's office was preparing to sue Weinstein Co. and request a temporary restraining order to block the sale if the company does not address its concerns. The report said the office has expressed worries over the appointment of Weinstein Co. President David Glasser as chief executive because he was Harvey Weinstein's right-hand man for years.
Schneiderman's office requested to have a degree of oversight of company as part of the purchase agreement, but Contreras-Sweet balked at the demand, said one person familiar with the matter who spoke on the condition of anonymity. The talks are not dead, however, and a deal may still happen, the person said.
Representatives for the Weinstein Co., Glasser, Yucaipa and Contreras-Sweet declined to comment. A spokeswoman for Schneiderman's office did not respond to a request for comment.
If a deal is not reached, the Weinstein Co. may be forced into bankruptcy. The financial burden and mounting legal threats against the company led many industry veterans to say the company would have to file for Chapter 11 bankruptcy protection or shut down. Weinstein Co. tried and failed to secure financial lifelines from investors such as Thomas Barrack's Colony Capital and private equity firm Fortress.
Santa Monica-based studio Lionsgate, known for "La La Land" and "The Hunger Games," was interested in buying certain assets of the company. Killer Content, the New York production company behind "Carol" and "Still Alice," had offered to buy the assets and remake them into an entity to support women. Other bidders included Miramax (owned by BeIN Media) and private equity firms Shamrock Capital Advisors and Vine Alternative Investments.
Contreras-Sweet's offer would not require Chapter 11 bankruptcy. Under the terms of the proposal, her group would assume $225 million in debt and establish a fund worth $50 million to $60 million for Weinstein's accusers.
