NEW YORK (AFP) - A New York lawsuit against the movie studio set up by disgraced Hollywood mogul Harvey Weinstein has forced the collapse of a once imminent deal to buy the production company, US media reported on Monday (Feb 12).
The Wall Street Journal said the deal, led by businesswoman Maria Contreras-Sweet, to buy The Weinstein Company for around US$500 million, had been close, but fell apart on Sunday because the lawsuit introduced too much uncertainty to go ahead.
The company, saddled with around US$250 million of debt in the wake of Mr Weinstein's downfall, will now likely enter bankruptcy reorganisation, the Journal reported, quoting people close to the company.
The bid from a group of investors led by Ms Contreras-Sweet, a former Barack Obama administration official, reportedly included a fund to compensate victims and plans to appoint a majority-woman board.
The New York Post said Ms Contreras-Sweet was withdrawing her nearly US$500 million offer, "infuriated" that the New York state attorney general was insisting on inserting a monitor on the board of the new company.
State prosecutors said the lawsuit - accusing Mr Weinstein, the company and his brother of failing to protect employees from his alleged sexual misconduct - was filed out of fear that the imminent sale of the company could leave victims without adequate redress.
"The board's whole purpose here was to try to keep this a going concern, save jobs - there's over 100 people's jobs at stake-and we were taking no equity," Mr Bob Weinstein was quoted as saying by The Journal.
"I hope that this deal does not go away for these people's jobs' because then there will be nobody monitoring anything."
Mr Weinstein's career went into freefall last October after allegations surfaced that he had sexually harassed, assaulted and even raped women going back 40 years. The accusations now come from more than 100 women.
State prosecutors accuse the company's board and executives of repeatedly failing to take adequate steps to protect staff or curb Mr Weinstein's behaviour, despite multiple complaints to human resources.
The twice-married father of five is being investigated by British and US police, but has not been charged with any crime. He denies having non-consensual sex and is reportedly in treatment for sex addiction.
The suit alleges that female assistants were required to facilitate Mr Weinstein's sex life as a condition of employment and had copies of a manual, known as a "Bible", that included directions on how to do so.
Prosecutors said Mr Weinstein made verbal threats to "kill" several staff or their families, and touted his connection to political figures and alleged Secret Service contacts that could "take care of problems".
They said one employee flew from London to New York to teach his assistants "how to dress and smell more attractive" to Mr Weinstein.
Mr Weinstein's drivers in New York and Los Angeles were required to keep condoms and erectile dysfunction injections in the car at all times, prosecutors said.
Among the alleged misconduct was making a female employee take dictation while leering at her as he lay naked on his bed in 2014-15.
He also allegedly put his hand on her upper thigh and buttocks near her genitalia to rub her without consent in the back of cars.
Largely female assistants allegedly contacted prospective sexual partners via text message or phone at his direction, and maintained space on his calendar for sexual activity.
Female executives also allegedly had to meet prospective sexual conquests and follow through on promised job offers, which prosecutors said demeaned and humiliated them, fuelling a hostile work environment.
The New York state attorney's office said that despite multiple complaints to the human resources department, there was no meaningful investigation or relief for victims, or consequences for Mr Weinstein.
It said the company's toxic work environment was shrouded in secrecy because of a practice of reaching non-disclosure agreements - a policy that has come under renewed scrutiny in the wake of the sexual harassment watershed that has followed Mr Weinstein's downfall.
"While Mr Weinstein's behaviour was not without fault, there certainly was no criminality," Mr Weinstein's lawyer Ben Brafman, one of America's most celebrated criminal defence attorneys, said in a statement.
"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 and there was zero discrimination."
State attorney general Eric Schneiderman said the lawsuit detailed Mr Weinstein's "vicious and exploitative mistreatment" of employees.
"As alleged in our complaint, The Weinstein Company repeatedly broke New York law by failing to protect its employees from pervasive sexual harassment, intimidation and discrimination," said Mr Schneiderman.
"Any sale of The Weinstein Company must ensure that victims will be compensated, employees will be protected going forward and that neither perpetrators nor enablers will be unjustly enriched."