The pending sale of the Weinstein Company to a group of investors who had planned to set up a victims’ compensation fund and install a majority-women board of directors fell through Tuesday after they discovered millions in previously undisclosed debt.
The sell off of the company cofounded by disgraced Hollywood mogul Harvey Weinstein had been announced last week, but according to a source close to the negotiations, the buyers learned on Tuesday that there was $64 million in undisclosed debt and other liabilities.
Maria Contreras-Sweet, the Obama-era leader of the Small Business Administration who had been spearheading the buyout, said she was disappointed by the discovery.
“We have received disappointing information about the viability of completing this transaction,” Contreras-Sweet said. “As a result, we have decided to terminate this transaction.”
A spokesperson for the Weinstein Company did not immediately respond to a request for comment.
Negotiations with Contreras-Sweet and a group of investors led by billionaire Ron Burkle had stalled after New York Attorney General Eric Schneiderman filed a civil rights lawsuit against the Weinstein Company and its founders and questioned the existence of a promised victims’ fund.
Maria Contreras-Sweet speaks at a roundtable discussion in 2014 as the Small Business Administration administrator.
The investors’ mission had been to build a movie studio led by a board of directors made up of a majority of women, save jobs, and to protect vendors who are owed money. NY Attorney General Eric T. Schniederman’s office signed off on the deal last week after getting the parties to agree to create a well-funded victim’s compensation fund that would supplement existing insurance coverage for those who have allegedly been assaulted or harassed by Weinstein.
The deal would have given the investment group control over the studio’s assets in a deal worth about $500 million, according to the Los Angeles Times, and give it a 51% stake in the company.
The studio has been in a tailspin since investigations by the New York Times and the New Yorker revealed decades of sexual harassment and assault allegations against Weinstein. And in recent weeks, the company has been on the verge of bankruptcy as the board tries to find a buyer.
Despite the breakdown of the deal, Contreras-Sweet said on Tuesday they are still considering purchasing some of the Weinstein Company’s holdings.
“I believe that our vision to create a women-led film studio is still the correct course of action,” she said. “To that end, we will consider acquiring assets that may become available in the event of bankruptcy proceedings, as well as other opportunities that may become available in the entertainment industry.”
Schneiderman’s press secretary, Amy Spitalnick, told BuzzFeed News the attorney general’s office would be disappointed if the parties cannot work out their differences and close the deal. Meanwhile, Schneiderman’s lawsuit against the Weinstein Company, Bob Weinstein, and Harvey Weinstein remains active.