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Bankruptcy may be best remedy for Weinstein Company's problems

The illicit and perhaps illegal sexual exploits of film mogul Harvey Weinstein have been making headlines in New York and elsewhere for several weeks, but often overlooked in the sensationalism that surrounds Weinstein himself is the effect on the company which he and his brother founded, The Weinstein Company.

While the company is vehemently denying that it is looking at an asset sale or a restructuring of the company's debt, bankruptcy is, in the eyes of many experts, the most effective method for dealing with the company's problems.

Many of the women whom Harvey Weinstein is alleged to have assaulted are expected to bring lawsuits for personal damages against both Weinstein and the company. If the company were to file a bankruptcy petition, the automatic stay provisions of the Bankruptcy Code could put a halt to those lawsuits until the company files a reorganization plan.

The major advantage of a bankruptcy proceeding is the centralizing effect it would have on the company's business. A Chapter 11 proceeding, with the company remaining in possession of its assets and keeping its current officers, a single judge would supervise the claims process. Some experts have speculated that some creditors may seek to displace current management. Again, having a single bankruptcy judge would simplify this process.

Harvey Weinstein is merely a spectacular example of a problem faced by businesses everyday: malfeasance or criminal conduct by a CEO or other officer that could reflect adversely on a company and drive away its customers. The options that are possibly being considered by the current officers and directors of The Weinstein Company may also work for other companies who find themselves in similar circumstances. The advice of a knowledgeable bankruptcy attorney may provide a significant advantage when unforeseen events threaten the company's future.

Source: Forbes, "The Best Option For The Weinstein Company Could Be Bankruptcy," Natalie Robehmed, Oct. 13, 2017

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