While Bob and Harvey Weinstein might have been the public faces of the Weinstein Company, it had nearly 300 employees according to LinkedIn.
And while the decision of the company to file for bankruptcy might be seen as a success for the #MeToo movement, ultimately it means that around 300 people are out of a job.
Considering the lawsuit which delayed and ultimately prevented the sale of the company was based around an investigation which found evidence of Weinstein Company employees aiding Harvey Weinstein in his sexual harassment of female film industry professionals, there are certainly those who don’t deserve any pity.
On the other hand, for those Weinstein Company employees who were none the wiser about their boss’ proclivities, this could be a dark day indeed.
The Weinstein Company has suggested it will file for bankruptcy. It has not said which kind of bankruptcy it will file for. There are two options. Chapter 7 bankruptcy and Chapter 11 bankruptcy. The implications of the former for current employees are much more worrisome than the latter.
Chapter 7 bankruptcy:
Most of them will probably be out of a job if the company declares Chapter 7 bankruptcy. This means that the company is totally out of money and cannot continue to pay employees.
How well do you really know your competitors?
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
In this instance, Weinstein Company employees become creditors of the company. They, along with other creditors, are entitled to receive any missed wages from any profits raised from the sale of the company’s assets.
The company might sell their contracts as part of the company’s assets. In essence, this would mean they might gain a new employer. However, they also may simply lose their jobs entirely.
Therefore, the filing for Chapter 7 bankruptcy does almost certainly mean that employees will go unpaid. At least until assets are sold that is, though that’s a process that may take months or even years.
Chapter 11 bankruptcy:
The Wall Street Journal reports the Weinstein Company will be filing for Chapter 11 bankruptcy.
Chapter 11 bankruptcy would have a much less significant impact on employees. Chapter 11 bankruptcy just means the company is seeking government help to restructure its debts. While it does so, external creditors must back off from taking action against a company.
Departments and employees contracts could end up sold as assets but they wouldn’t necessarily.
While this debt restructuring is taking place, the business continues operations as usual. There is no significant impact on employees or their wages.
However, even when filing for Chapter 11 bankruptcy, the company is free to lay off its employees. It could still terminate employees as part of its usual business operations.
What have board members said about The Weinstein Company bankruptcy?
Despite the WSJ’s report, a letter released by the Weinstein Company suggests the bankruptcy filing will directly affect employees.
The letter from the Weinstein Company’s board released on Sunday night blasted Maria Contreras-Sweet and Ron Burkle, the leaders of an investment firm that was set to buy the company.
Among other things, the letter criticised the buyout deal for not providing enough money to continue paying employees:
We made clear that the one thing the Company needed in furtherance of your good faith was interim funding to run our business and maintain our employees – employees who have remained dedicated to the Company even amidst great uncertainty…
Instead, late last night, you returned to us an incomplete document that unfortunately does not keep your promises of February 21… there is no provision for necessary interim funding to ensure your future employees were paid; instead, you increased the liabilities left behind for the Company, charting a financial path that will fail.
Other new conditions make clear that a closing, if one were to happen at all, could take many months (or longer). In short, the draft you returned presents no viable option for a sale.
Presumably the reason for these statements is that the Weinstein Company has itself run out of money to pay its employees.
This also has implications for former employees and stars assaulted by Harvey Weinstein. They must now left wait even longer for compensation.
On the plus side, the employees probably will get their wages eventually.
The Weinstein Company has the rights to a huge amount of popular films including The King’s Speech, Django Unchained, Silver Linings Playbook, Carol, and The Iron Lady.
By selling the rights to these films, it could generate enough revenue to pay its employees.
What have employees said about the company?
Despite all this, perhaps for some employees this disaster is a blessing in disguise.
Even before the sexual harassment scandal enveloped the Weinstein Company, anonymous employees shared their frustrations on job-review site Glassdoor. Employees often cited poor HR practices and bad management:
Anonymous employee (03/02/2016):
“Dealing with HR during when it came time to negotiate my new employment agreement was an absolute nightmare.”
Anonymous former employee (04/01/2016):
“Insanely micromanaged from the top down. This lack of decision making is catastrophic for business and leaves employees on constant, and expensive, clean up duty. Must have thick skin is an understatement.”
Former manager (02/04/2014):
“Some of the higher ups here are extremely volatile (to put it mildly). One particular HU was out to sabotage anyone who stood in his way and made him look bad (if you yourself looked good to anyone else).”
“Good luck getting anything done through normal channels. Management is slow moving, lethargic. Talent is not always properly supported so all the good ones move on.”
Anonymous employee (07/02/2012):
“Lack of solid structure, disorganization, disrespect from management, 24/7 work expectations.”
The company still hasn’t quite declared bankruptcy yet. In the coming days and weeks there will presumably be more clarity over the future of the Weinstein Company’s employees.