By Karen Freifeld and Jessica DiNapoli
NEW YORK (Reuters) - New York's attorney general said on Monday a deal for the Weinstein Company should include a bigger compensation fund for victims of ex-chairman Harvey Weinstein, speaking a day after the state's lawsuit scuttled a deal.
The film and TV studio was close to inking a deal on Sunday to sell itself for more than $500 million to an investor group led by Maria Contreras-Sweet, a former official in President Barack Obama's administration, when New York Attorney General Eric Schneiderman filed a civil rights lawsuit against the company. People familiar with the matter said the lawsuit put sale negotiations on hold.
Schneiderman said he wants the "facts of our complaint factored into whatever deal is structured going forward." The lawsuit does not block the sale but creates liabilities that make it difficult to finalize. A sale to Contreras-Sweet is now unlikely to advance, sources told Reuters.
The Weinstein Company did not immediately return a request for comment. A representative for Contreras-Sweet declined to comment.
The Weinstein Company has been seeking a deal that would spare it from bankruptcy after more than 70 women accused Harvey Weinstein, once one of Hollywood's most influential men, of sexual misconduct including rape. Weinstein denies having non-consensual sex with anyone.
Schneiderman said at a press conference on Monday that he wanted to ensure a dedicated victim's compensation fund that would not be gobbled up by legal fees and other expenses. Contreras-Sweet had proposed about $30 million for victims in her initial bid made late last year, Reuters reported. (http://reut.rs/2iAmw2O)
A sale should also not reward executives including Chief Operating Officer David Glasser, who supervised the human resources department and was in charge of handling dozens of complaints, Schneiderman said. Contreras-Sweet's offer called for Glasser to be the CEO of the new company, Schneiderman said.
The company never launched an investigation into any of the complaints, he said. The lawsuit says that the Weinstein Company's board and executives failed to take action after receiving complaints about harassment and discrimination from employees.
"The Weinstein Company repeatedly broke the law," Schneiderman said on Monday. "It is clear to us that the company’s management was complicit. Not only did they fail to stop it, they enabled it and covered it up."
Other bidders for The Weinstein Company have included Lions Gate Entertainment Corp <LGFa.N> and production company Killer Content Inc. Killer Content said in January that bankruptcy may be the best option for The Weinstein Company.
The New York Times first reported in October on multiple allegations of sexual misconduct by Weinstein. Reuters has not been able to independently confirm the allegations.
Since then, similar allegations have been leveled against many powerful men in business, politics and entertainment, and the #MeToo movement has emerged of victims using social media to share their stories of harassment and abuse.
(Reporting by Karen Freifeld and Jessica DiNapoli; Editing by Cynthia Osterman)