Katz, Marshall & Banks associates Matthew LaGarde and Jessica Westerman co-authored an article for the Expert Analysis section of Law360 titled, “How Will Weinstein Co. Bankruptcy Impact Accusers?”
While bankruptcy proceedings almost always yield less than full compensation to creditors, the amounts that former Weinstein Company employees will receive depends on where they fall in the line of prioritization. This prioritization is largely contingent on when the claims “arose” – before or after the company petitioned for bankruptcy. Post-petition claims are generally granted highest priority for payment by the bankruptcy estate. Individuals with claims that arose pre-petition will be considered general unsecured creditors, and will fall low in the line of prioritization for payment.
It seems likely that the Delaware court, where the bankruptcy is being processed, will rule that the sexual harassment and assault claims of all of Weinstein’s accusers arose pre-petition because The Weinstein Company fired Weinstein before declaring bankruptcy. Despite this, on June 5, the judge overseeing the Weinstein Company’s bankruptcy proceedings allowed a suit filed by six women accusing Weinstein of assault and misconduct to proceed, lifting the automatic stay on proceedings that the bankruptcy filing had triggered.
A possible workaround for some victims would be to assert claims against Weinstein personally, rather than – or in addition to – the Weinstein Company. However, even if these claims succeed legally, it is doubtful that Weinstein’s personal assets will be sufficient to compensate everybody fairly.
Find a PDF of the full article here.