As expected, the Weinstein Company, went belly-up bankrupt. Smell ya later perpetrators.
Reported first by Variety, the outlet states, "The Weinstein Co. announced Monday that it had filed for bankruptcy, finding itself unable to survive the allegations of sexual abuse leveled against co-founder Harvey Weinstein last fall.
The company may yet be able to reorganize and continue to produce TV shows and films under new ownership. Lantern Capital put in a 'stalking horse' bid, which provides a floor for a bankruptcy auction."
But what does filing for bankruptcy really mean? And what on earth is a stalking horse bid? Does the headless horseman ride him into your town? Sadly, no. (Childhood dream, smashed.)
So we're breaking down some familiar and unfamiliar terms.
BANKRUPTCY: WHAT EVEN IS IT?
As a young woman I first started to dig into the concept of bankruptcy in 2010. That's right. The first year R&B superstar Toni Braxton claimed $50,000,000 in debt and chapter 7'd her life. Un-break her heart. But then she filed for bankruptcy a second time. 6 months after that second filing in 2014, Braxton purchased a $3 million dollar home in "The Oaks" neighborhood of LA. How does that work? It's confusing that most people who file bankruptcy emerge in one piece.
Contrary to popular belief, many folks think that filing bankruptcy wipes out all debt obligations. That's not exactly true. You still have to pay off at least some of your debt, and what kind of bankruptcy you file will determine how that works.
So, let's break down the two most common types of bankruptcy.
You've likely heard of a Chapter 7 filing and a Chapter 13 filing (there are also chapter 11 and 12 filings-- the latter of which is only for farmers and fisherman, which is sexy), but for most of us who aren't 50 million in debt, we don't know the difference.
According to FindLaw.com, "Chapter 13 bankruptcies generally fall under the reorganization category, meaning that you will probably be able to keep your property, but you must submit and stick to a plan that will allow you to repay some or all of your debts within three to five years."
Chapter 7 bankruptcies normally fall in the liquidation category, meaning your property could be sold in order to pay back your debts. Property in this case could mean a car of second home. To file Chapter 7 you have to meet certain financial eligibility requirements-- your income being the most important factor.
So does the Weinstein Company filing bankruptcy mean it's going down for good? No. Will it ruin their credit? Didn't Harvey already do that?
WTF IS A STALKING HORSE
Since I don't spend my days perusing bankruptcy webbies, I had never heard this term. (Horse terms I do know include: "Get off your high horse," "Eat like a horse," and my fave "Don't look a gift horse in the mouth.")
[side bar: comment your favorite horse idioms in the comments below and let's be internet neiiighbors.] Back to biz.
According to The Cut, "The sale of TWC to an investor group lead by former Obama administration cabinet member Maria Contreras-Sweet and billionaire Ron Burkle fell through earlier this month. On Monday, the Weinstein Company released a statement expressing hopefulness about a new investor, Lantern Capital Partners, who submitted a 'stalking horse' bid to purchase the company in advance of a potential bankruptcy auction. 'The Board selected Lantern in part due to Lantern’s commitment to maintain the assets and employees as a going concern,' TWC said in the statement. 'The Company hopes that this orderly sale process under the supervision of the Bankruptcy Court will allow it to maximize the value of the Company’s assets for the benefit of its creditors and other stakeholders.'"
A Stalking Horse offer or bid is as follows: A stalking horse offer, agreement, or bid is an attempt by a bankrupt debtor to test the market for the debtor's assets in advance of an auction of them. The intent is to maximize the value of its assets or avoid low bids, as part of (or before) a court auction.
Does the stalking horse ride off in the sunset with the company assets? Again, this shit is complicated and there are pros and cons to this approach. National Real Estate Investor does a good job breaking down the pros and cons in language that makes sense.
Did this help or are you more lost than ever?