Now-defunct film company the Weinstein Co. has declared bankruptcy in Delaware. In most cases, bankruptcy protects individuals and businesses from pending lawsuits, but a judge in the Weinstein case has ruled that lawsuits from alleged victims of Harvey Weinstein may move forward during the bankruptcy proceedings.
A group of women has filed a lawsuit against the Weinstein Co. in New York. They seek to litigate as a class action, representing potentially hundreds of alleged victims of sexual harassment or misconduct.
The reason the Weinstein Co. is being sued is that employers can be held legally liable for the actions of employees under certain circumstances. In this case, the plaintiffs argue that the Weinstein Co. either knew of Harvey Weinstein’s misconduct and did nothing to stop it, that they attempted to cover it up, or that they actively facilitated it. That could include, for example, negotiating secret settlements and nondisclosure agreements that kept Weinstein’s misconduct from becoming more widely known.
The Weinstein Co. objected to answering the lawsuit while it is in bankruptcy, arguing that it would be a distraction from an “efficient and orderly liquidation process” for the company. It also objected to the release of Harvey Weinstein’s employment contracts.
The bankruptcy judge ruled against the company on both counts. The company is in liquidation bankruptcy, meaning that it plans to sell off all its assets and close down permanently. Therefore, the judge ruled that the company can no longer be shielded from the lawsuit. If the plaintiffs have to wait until after the bankruptcy, there would be no company left to sue and no remaining assets for compensation.
The judge also allowed the release of Harvey Weinstein’s employment contract rather than keeping it secret, as the Weinstein Co. had asked.
According to a lawyer for the alleged victims, the contract shows that the company facilitated Harvey Weinstein’s actions. A Weinstein Co. attorney declined to comment to Bloomberg.
