Harvey Weinstein. Photo: Lev Radin/Shutterstock.com

After a week where settlement talks over Harvey Weinstein's alleged sexual misconduct have seemingly gained momentum, only to draw fire from some high-profile plaintiffs lawyers, attorneys in The Weinstein Co.'s Chapter 11 bankruptcy case are expected to meet next week in Delaware to argue a motion to liquidate the estate.

The hearing, scheduled for June 4 in a Wilmington courtroom, comes in response the debtor's request that U.S. Bankruptcy Judge Mary F. Walrath convert the proceedings to a Chapter 7 case in an effort to finally wind down the estates and bring more than 14 months of bankruptcy litigation to a close.

“For a variety of reasons, including considerations of insurance limitations and timing considerations regarding the initiation of potential proceedings, the debtors have concluded that conversion is the most effective course for maximizing recovery to the estates,” attorneys wrote in a May 14 court filing.

However, the hearing could provide some additional drama after attorneys for The Weinstein Co., its creditors and the New York Attorney General's office floated the possibility of a $44 million deal to settle civil claims by women who accused studio founder and disgraced Hollywood film producer Harvey Weinstein of sexual misconduct.

An attorney for a committee of the company's largest creditors, last week said that the tentative settlement, which would allocate $30 million to a broad pool of Weinstein's alleged victims, “could be a cornerstone” to a global settlement resolving the bankruptcy case. As a part of the proposed deal, which was first reported by The Wall Street Journal, $14 million would go toward paying the legal fees of Weinstein's associates, including former board members of The Weinstein Co.

However, some plaintiffs attorneys have balked at the idea of a settlement, in a blow to the idea advanced by attorneys representing The Weinstein Co. that it could quickly wind up its potential civil liability.

Attorneys in the bankruptcy case were expected to meet privately Wednesday to discuss a possible final resolution. They did not return calls this week seeking comment on the negotiations.

The company filed for bankruptcy in 2018, in the face of hundreds of millions of dollars in debt and multiple lawsuits filed by Weinstein's accusers. Last March, Walrath approved the studio's $310 million sale to Lantern Capital Partners, and since then, attorneys have been fighting over how to distribute proceeds from the sale among The Weinstein Co.'s creditors, Weinstein's accusers and bankruptcy lawyers working on the case.

Paul N. Heath, an attorney for The Weinstein Co., said at the the May 23 hearing that the parties last June resolved a dispute between Lantern Partners and the debtors, which resulted in a more than $20 million reduction in the purchase price. The creditors' committee originally opposed that agreement, but withdrew its objections in exchange for an increased role in the bankruptcy case going forward, he said.

In mediation, in became clear that any global settlement in the bankruptcy case would have to include an estate release of any claims against The Weinstein Co.'s former directors and officers, who have since been replaced by a reconstituted and independent board. The company has since asked for permission to retain Bernstein Litowitz Berger & Grossmann on a contingency-fee basis to assess the value and viability of those claims.

Mediation talks broke down in early April, but were revived earlier this month, thanks in part to pressure created by the debtor's motion to convert the case, Robert J. Feinstein, an attorney for the committee, said.

Feinstein told Walrath that the estate was running low on cash and that a settlement was needed before funds were further depleted by additional attorney fees.

“The contingency arrangement is another hand in a pie that's now considerably smaller than people would have liked to have obtained from that mediation,” Feinstein said at the hearing.

“I think we all owe it to the case, your honor, to get in a room and see if we can use the money that's now becoming available from the mediation to resolve this case in Chapter 11,” he said.

While the parties did not discuss the specific terms of the proposed settlement last week, an attorney for studio co-founder Bob Weinstein announced the tentative deal to resolve the civil claims against his brother.

“We now have an economic agreement in principle that's supported by the plaintiffs, the AG's office, the defendants, and all of the insurers, that if approved will provide significant compensation to victims, creditors of the state, and allow the parties to avoid years of costly, time-consuming, and uncertain litigation on all sides,” said Adam Harris, a partner at Schulte Roth & Zabel. “Obviously, that's the definition of what we think is a good settlement.”

Despite Harris' assurances, counsel to at least two Weinstein accusers have said that news of a resolution to their clients' claims was premature.

Ted Boutrous, who represents actress Ashley Judd, took to Twitter last week to clarify that his client was not a party to any settlement.

“Our client @AshleyJudd's case against Harvey Weinstein is ongoing and we intend to bring it to trial,” he wrote May 24.

Meanwhile, attorneys Douglas Wigdor and Kevin Mintzer, who represent actor Wedil David in her claims of sexual assault against Weinstein, called the media reports “false,” and said their client had “steadfastly rejected the proposed deal.”

“Sadly, rather than adequately compensate the rape and sexual assault victims of Harvey Weinstein who have pursued viable legal claims that have been brought within the statute of limitations, the proposed deal would provide millions of dollars to the ultra-wealthy directors of the Weinstein Company, such as James Dolan, and their big firm lawyers,” the attorneys stated.