Manatt’s Ivan Kallick, chair of the firm’s bankruptcy practice, spoke with Forbes on what a bankruptcy could look like for The Weinstein Co. The publication explained that filing for bankruptcy could be a “silver bullet” for the company, which has been in turmoil since the board fired co-chairman Harvey Weinstein amid allegations of sexual assault and harassment.
While it is unclear how much capital the company currently has on hand, it holds a $400 million credit line raised from various lenders. New loans will be hard to secure given the scope of the scandal, and if claims emerge and begin to mount, experts say restructuring through a Chapter 11 bankruptcy could alleviate the pressure of potential lawsuits.
“A bankruptcy would centralize the claims process, meaning it would be handled by one particular judge,” rather than judges in the separate states in which claims are filed, explained Kallick.
Creditors, however, may not be satisfied with that arrangement, as it would leave current management in place and allow the company to retain control of its assets.
“It would not surprise me if a group of creditors might claim that current management and board should not be in charge of managing the company in a Chapter 11 if they knew that Weinstein was an extraordinary liability and that a truly independent board might have gotten rid of him,” said Kallick.
Read the article here.