A Delaware judge Tuesday denied a motion by some victims of jailed former mogul Harvey Weinstein to convert Weinstein Co.’s bankruptcy proceeding from Chapter 11 to Chapter 7, allowing the long process to move forward. Chapter 7 can dispense with classes of creditors – of which abuse victims are one in this case — and allow individuals to pursue claims separately.
The attorney representing nine victims argued at a hearing this morning that the Chapter 11 plan so far encompasses much too large a group of claimants — possibly in the thousands — with too wide a range of claims, from rape to workplace intimidation. That would dilute recovery of the $17 million in funds allocated for sexual misconduct for those who had suffered the most. It would also deprive them of an ability to bring their case to a jury.
The lawyer for creditors, flanked by a representative of the New York U.S. District Attorney’s office, said Chapter 11 was appropriate — and Judge Mary Walrath of U.S. Bankruptcy Court agreed. Both noted that the Chapter 11 proposal allows women to opt out of the settlement and pursue their claims against Weinstein in court.
The judge also noted that victims who objected could raise the issue at confirmation and vote against the plan.
The Weinstein Company Holdings and 54 affiliated companies — the debtors — filed petitions in March of 2018 with the United States Bankruptcy Court for the District of Delaware seeking relief under Chapter 11. The case is complicated and highly charged as it involves sexual abuse victims as well as traditional creditors like businesses that are owned money.
Weinstein is currently jailed at maximum security Wende Correctional Facility near Buffalo serving a 23-year sentence his conviction earlier this year in New York on various sex crimes. He also faces seven criminal a counts involving five victims in Los Angeles.
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