Weinstein Company Declares Bankruptcy, NDA's Will Be Ended

Weinstein Company Declares Bankruptcy, NDA's Will Be Ended

It seems like an eternity since the New York Times broke the Harvey Weinstein story. A story that proved to shape the culture and give voice to women who had long been silenced, creating the #MeToo movement. In truth, it has been less than six months since Jodi Kantor and Megan Twohey first reported about Weinstein’s decades-long history of sexual victimization of women. After that report, the floodgates opened and woman after woman began telling their stories - many of whom were household names - people like Ashley Judd, Rose McGowan, Angelina Jolie, and Gwenyth Paltrow.

The aftermath has been more of a tsunami than a ripple. Since the Weinstein story broke, powerful men in a wide range of industries, from Hollywood to government, have been held to account for years of predatory behavior against women. In the immediate aftermath, Weinstein was fired from the company he co-founded, Weinstein Company. The story was published on October 5th, Weinstein was fired on October 8th, and Weinstein stepped down from the board of the company on October 17th.

In the wake of the scandal, the Weinstein Company descended into chaos. The company was experiencing financial difficulty before the allegations were made against Weinstein, but after the onslaught of credible allegations from women, the Weinstein Company was toxic. Leaders remaining in the company were faced with two options: try to sell or declare bankruptcy.

The company initially opted for strategy number one, but that prospect quickly faded amid further insight into the Weinstein Company.

In February, New York Attorney General Eric Schneiderman revealed that the problems in the Weinstein Company were not isolated to Weinstein himself. Instead, the New York Attorney General asserted that the problem was with the entire company. In a press release, Schneiderman opined:

“Any sale of The Weinstein Company must ensure that victims will be compensated, employees will be protected going forward, and that neither perpetrators nor enablers will be unjustly enriched.”

This made an outright sale of the company exceptionally unlikely. Sure enough, on March 19, the Weinstein Company announced that they were filing for Bankruptcy. Lantern Capital Partners, a private equity firm, negotiated with Weinstein Company ahead of the announcement in an effort to position themselves to acquire the company in the bankruptcy process.

While news that the company is declaring bankruptcy is relevant, if not unsurprising, what is perhaps more consequential in the long term is the rest of the announcement. In addition to announcing the bankruptcy, Weinstein Company announced that all people who signed nondisclosure agreements, either victims or witnesses to Harvey Weinstein’s conduct, are now released from those agreements.

The statement reads, “Effective immediately, those ‘agreements’ end,” adding, “no one should be afraid to speak out or coerced to stay quiet.” The irony there is palpable, and the consequences are likely to be far-reaching.

No one knows how many nondisclosures have been signed in the company over the decades of Harvey Weinstein’s abuses. At the height of the scandal, many people within the company seemed to suggest that they had information but were unable to speak and had been for a long time.

Not only might the release of nondisclosures mean a new wave of stories detailing abuse, but it may also have criminal implications for Weinstein.

Several states, including New York, have initiated investigations into the allegations against Weinstein. As victims and witnesses were legally bound to silence because of nondisclosure agreements, they were unable to cooperate in any such investigation.

With the release of nondisclosure obligations, those individuals are now free to speak to the public, or to investigators, or both, without fear of punishment. It remains to be seen what there is to be said and what it might mean for Weinstein.

Nondisclosure agreements are a powerful tool for those in a position of power to bargain for the silence of another, and Weinstein is surely not the only person to make use of them in such a way.  

Government officials have also frequently used nondisclosure agreements as a tool to quiet those who might have something to say that would be detrimental to their political careers.

Unsurprisingly, another NDA of significant intrigue has been the one between adult film star Stormy Daniels and President Trump. Daniels is currently suing to be released from her NDA. The President and his legal team are, of course, pushing back.

Though there are still many details in the Weinstein case to be uncovered, what’s clear is that the legal tools utilized by men like Harvey Weinstein are something that need to be discussed more broadly within the #MeToo movement. This practice of buying silence has been abused for far too long.