Weinstein Company – Seeks Authorization For Settlement Agreement that Resolves Residual Payments Dispute for $11mn

December 5, 2018 – The Debtors requested Court authority to enter into a settlement agreement (the “Settlement Agreement”) between the Debtors, the “Guilds” (comprised of DGA, SAG-AFTRA, and WGA West), certain agents acting on behalf of lenders and the Debtors’ Official Committee of Unsecured Creditors (the “Committee” and, together with the Debtors, the Guilds and the agents, the “Parties”) [Docket No. 1826]. The Settlement Agreement resolves a dispute amongst the Parties in respect of multiple claims (the “Guild claims”) involving residual payments owed to directors, performers, and writers under Guild collective bargaining agreements. The Debtors had set aside $8 million in respect of the Guild claims based on domestic rights that comprise certain collateral pledged by the Debtors to the Guilds. The Guilds contended, however, that the collateral should not be limited to domestic rights but rather should include rights “in all markets and territories throughout the world.” 

 

The Settlement Agreement notes that, “The Guilds shall collectively have an allowed secured claim against the Debtors’ estates (the ‘Allowed Secured Claim’) in the aggregate amount of $11.0 million on account of all secured Guild Residuals other than the Post-Closing Secured Administrative Claims….Each Guild fully and irrevocably waives, and agrees not to assert, any secured claim against the Debtors’ estates other than the Allowed Secured Claim and any Post-Closing Secured Administrative Claims.” 

 

The Debtors motion notes that, “The benefits that the Settlement Agreement provide to the Debtors, their estates, and key stakeholders in these Bankruptcy Cases cannot be overstated. As the Bankruptcy Court and parties in interest are aware, issues related to the Guilds and Guild Residuals have played a significant role in these Bankruptcy Cases and impacted many facets of the Debtors’ postpetition operations….The Settlement Agreement allows the Debtors and Defendants to avoid the costs, delay and risk inherent in litigating the amount of the pre-Closing Date secured Guild Residuals, which, given the nature of Guild Residuals and the numerous Debtor projects pursuant to which secured Guild Residuals were owing, would consume a significant amount of the Debtors’ limited resources and the Bankruptcy Court’s time.”