ARI SHAPIRO, HOST:
After multiple lawsuits, mounting debt and a destroyed reputation, The Weinstein Company is filing for bankruptcy. There were investors willing to buy the movie and TV company, but the Weinstein board decided it was not happy with their offer. NPR's Elizabeth Blair has more.
ELIZABETH BLAIR, BYLINE: The deal to buy The Weinstein Company seemed to be moving forward. Investors had agreed to put up $500 million for the company and its debt. The bidding group was led by Maria Contreras-Sweet, formerly of the Obama administration. Her plan was to change the name and create a mostly female board of directors. But last night, The Weinstein Company pulled the plug. In a letter, the company claimed, among other things, the bidders weren't willing to put up enough cash to keep it afloat. The letter said they needed interim funding to run the business and maintain its employees. A source close to the deal told Variety that the bidders were surprised by the announcement. This is the second setback for Contreras-Sweet. The first came a couple of weeks ago when the New York attorney general got involved.
ERIC SCHNEIDERMAN: We have investigated other companies for patterns of sexual discrimination or harassment. We have never seen anything as despicable as what we've seen here.
BLAIR: Eric Schneiderman filed a civil rights suit against The Weinstein Company for, quote, "unrelenting sexual harassment, intimidation and discrimination." At a press conference, he called out Harvey Weinstein's behavior.
SCHNEIDERMAN: The fact that he had a group of employees who were responsible for cleaning up his office after sexual encounters - including returning articles of clothing to the women who left them behind - is really something that should be shocking to anyone. We're not opposed to any deal going forward, but any deal has to take into account the needs for compensation to victims and protection of employees going forward.
BLAIR: Schneiderman filed that lawsuit just before the deal was set to be finalized. He was adamant that the sale include a victim's compensation fund and that it remove any executive who enabled Weinstein's misconduct. Those conditions appeared to have been met. A key Weinstein executive was fired. And today, the AG's office said the parties had agreed to a $90 million victims fund. So now that the sale is off and the company plans to file for bankruptcy, what happens to the victims? Attorney Kenneth Feinberg has overseen compensation funds for victims of 9/11, the Boston Marathon bombing and the Pulse Nightclub shooting in Orlando. He says victims might have less of a chance of getting paid now.
KENNETH FEINBERG: An alleged victim - let's say - files a lawsuit against The Weinstein Company alleging sexual abuse. Even if that victim could recover from a jury an award - damages, are there sufficient funds in bankruptcy to pay that award? That's a big question.
BLAIR: Feinberg says in bankruptcy, secured creditors, like banks and investors, typically take priority over unsecured creditors, like victims filing a lawsuit. Attorney Gloria Allred represents a number of alleged victims of Harvey Weinstein's sexual misconduct.
GLORIA ALLRED: We're very disappointed that The Weinstein Company will file for bankruptcy. We were hoping for a solution that would create a fund to compensate Mr. Weinstein's many victims. And we had confidence that that fund would have been created if the company had been sold.
BLAIR: Allred says she'll be reviewing her client's options with bankruptcy lawyers. The New York attorney general's civil rights lawsuit will move forward. The lawsuit is seeking hundreds of thousands of dollars in penalties and restitution for the victims. It names not only The Weinstein Company but also Harvey and Bob Weinstein personally. Elizabeth Blair, NPR News.
(SOUNDBITE OF EMANCIPATOR'S "GOODNESS") Transcript provided by NPR, Copyright NPR.