Sale Of The Weinstein Company Delayed By Lawsuit

Harvey at the New York Fashion Week
Nicholas Hunt / Getty Images

The Weinstein Company is being sued by New York attorney general Eric Schneiderman for alleged civil rights violations in the workplace, delaying the sale of the company. The lawsuit filed electronically in the Manhattan State Supreme Court delays the sale of the company amid the allegations against Harvey Weinstein. The company has been greatly affected by the allegations of sexual misconduct against Mr. Weinstein. The October revelations by the New York Times highlighting decades of sexual harassment against Harvey have put the company on the brink of bankruptcy.

The timing of the lawsuit has halted the sale of the company for $275 million, plus $225 million debt to investors, according to the New York Times. Maria Contreras-Sweet, who ran the Small Business Administration under President Obama, led the investors interested in the company. The business woman has publicly said a multimillion-dollar settlement fund would be put in place for Weinstein’s accusers. Details of the sale indicate that Harvey and Bob Weinstein, who own 42 percent of the company, would not be receiving any monetary compensation. A BBC report also corroborates the abrupt stop in the sale of the company because of the lawsuit by Mr. Schneiderman.

The Weinstein Company, according to the lawsuit, has been under investigation for four months due to the allegations against Harvey. The lawsuit says that the management and board of directors were aware of Harvey’s harassment of employees and interns but ignored it.

The New York Times reports an instance where an employee who complained to human resources later discovered that it was forwarded by email to Harvey Weinstein. The Times quotes an employee in regards to the company.

“[It was a] toxic environment for women. The suit says Mr. Weinstein had used female employees to aid him in his pursuit of sexual targets. It says that two employees described having to procure injectable erectile dysfunction medication for Mr. Weinstein and says that one of them received a bonus for obtaining the medication ‘and was at times directed by HW to administer the injections.'”

The lawsuit does not prevent the eventual sale of the company, but it could mean the payment of fines by the company and the Weinstein brothers. Weinstein’s lawyer, Benjamin Brafman, released a statement on behalf of his client.

“While Mr. Weinstein’s behavior was not without fault, there certainly was no criminality, and at the end of the inquiry it will be clear that Harvey Weinstein promoted more women to key executive positions than any other industry leader.”

Contreras-Sweet expressed shock at the call for compensation of victims, which was already part of her proposal. When the company is sold, Contreras-Sweet will be the “chairwoman of a majority-female board of directors.” Reports also indicate that “Women will be significant investors in the new company and control its voting stock.”

The survival of the company is dependent on the successful sale to willing investors. The sale of the company is pending until the court decides the fate of the company.