Six months after accusations of sexual assault and harassment brought the downfall of Hollywood mogul Harvey Weinstein, the company he co-founded filed for bankruptcy, releasing victims from nondisclosure agreements that prevented them from speaking about the producer’s alleged crimes.
The Weinstein Company filed late Monday in the U.S. Bankruptcy Court in Delaware after failing to find a buyer. The company said it has reached an agreement with a Texas-based private equity firm called Lantern Capital Partners, which has agreed to buy the company’s assets. Although Lantern is the first bidder in the bankruptcy process, others could make a higher bid in the court-monitored auction of the company’s assets.
Lantern was one of several investors that hoped to acquire the company outside of bankruptcy, but the negotiations fell through in February when New York Attorney General Eric Schneiderman filed a lawsuit claiming the entire company enabled Weinstein’s crimes. Since October, more than 80 women—including actresses Gwyneth Paltrow, Ashley Judd, and Angelina Jolie—have accused Weinstein of rape, sexual assault, indecent exposure, and harassment that stretch back decades.
The New York Times reports that Weinstein used restrictive nondisclosure agreements that prohibited victims from speaking or acting on past actions that could harm the reputation of the company or its top executives. In the past, Weinstein—who has denied all allegations of nonconsensual sex—privately settled claims with female employees accusing him of sexual misconduct. In just one instance, the company offered to pay Charmed actress Rose McGowan $1 million in exchange for signing a nondisclosure agreement. (She declined.)
The tactic was based on the assumption that money was enough to placate women who wouldn’t want to speak publicly about such a private and embarrassing encounter. It was successful for years until a few women decided to defy the contracts and speak on the record with publications like the New Yorker and the New York Times.
It’s unclear what effect the termination of the nondisclosure agreements will have. There’s no telling how many more women, released from their contractual obligations, may come forward with stories of abuse, revealing even more thoroughly the extent of Weinstein’s crimes and perhaps providing evidence that can be used in future lawsuits and criminal prosecutions.
Schneiderman said in a statement Monday that lifting the nondisclosure agreements was a “watershed moment” in addressing the effects of sexual misconduct in the workplace. The Weinstein Company also praised the move in a statement, saying it was an important step toward justice.
“No one should be afraid to speak out or coerced to stay quiet,” the statement said. “The company thanks the courageous individuals who have already come forward. Your voices have inspired a movement for change across the country and around the world.”
Yet lawsuits filed against the company by women who claim the studio did nothing to stop Weinstein’s behavior are delayed in court, and the bankruptcy now makes it much more difficult for those women to recover damages. Variety reports that previous bids to buy the Weinstein Company had proposed using revenue from several unreleased films to supplement an insurance payment, bringing the total funds for paying victims to as much as $90 million. Under the Lantern bid, if the insurance payment comes through, it is expected to cover only up to $30 million to Weinstein’s dozens of victims—and perhaps many more.