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Case 18-10601-MFW Doc 770 Filed 05/04/18 Page 1 of 12

IN THE UNITED STATES BANKRUPTCY COURT


FOR THE DISTRICT OF DELAWARE

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:
In re: Chapter 11
:
:
THE WEINSTEIN COMPANY HOLDINGS Case No. 18-10601 (MFW)
:
LLC, et al.,
:
Jointly Administered
:
Debtors.1
:
Re: Docket No. 689
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EMERGENCY MOTION OF OFFICIAL COMMITTEE OF


UNSECURED CREDITORS PURSUANT TO BANKRUPTCY RULES 7026(c)
AND 9014(c) AND LOCAL RULES 7026-1(c) AND 7030-1(c) TO QUASH
NOTICE OF DEPOSITION AND FOR PROTECTIVE ORDER
BARRING REQUESTED DISCOVERY PROPOUNDED BY THE DEBTORS

The Official Committee of Unsecured Creditors (the “Committee”) of the above-

captioned debtors and debtors in possession (the “Debtors”) hereby submits this emergency

motion (this “Motion”) in respect of amended discovery propounded upon counsel for the

Committee on Thursday, May 3, 2018, at 11:31 p.m. Eastern time, by counsel to the Debtors.2

The discovery relates to the Debtors’ Motion for Entry of Orders (I)(A) Approving Bidding

Procedures for Sale of Substantially All of the Debtors’ Assets, (B) Approving Stalking Horse

Bid Protections, (C) Scheduling Auction for, and Hearing to Approve, Sale of Substantially All of

the Debtors’ Assets, (D) Approving Form and Manner of Notices of Sale, Auction and Sale

1
The last four digits of The Weinstein Company Holdings LLC’s federal tax identification number are (3837). The
mailing address for The Weinstein Company Holdings LLC is 99 Hudson Street, 4th Floor, New York, New York
10013. Due to the large number of debtors in these cases, which are being jointly administered for procedural
purposes only, a complete list of the Debtors and the last four digits of their federal tax identification numbers is not
provided herein. A complete list of such information may be obtained on the website of the Debtors’ claims and
noticing agent at http://dm.epiq11.com/twc.

2
Counsel to the Debtors initially propounded discovery upon counsel to the Committee on Wednesday, May 2,
2018, at 10:47 p.m. Eastern time. After a meet and confer amongst the parties, the amended discovery was served
on May 3, 2018, at 11:31 p.m. Eastern time. Although narrower than the initial set of requests, the amended
discovery nonetheless remains objectionable.

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Hearing, (E) Approving Assumption and Assignment Procedures and (F) Granting Related

Relief and (II)(A) Approving Sale of Substantially All of the Debtors’ Assets Free and Clear of

All Liens, Claims, Interests and Encumbrances, (B) Approving Assumption and Assignment of

Executory Contracts and Unexpired Leases and (C) Granting Related Relief [Docket No. 8] (the

“Sale Motion”).

By this Motion, the Committee requests an order (1) quashing the Debtors’

amended deposition notice (the “Deposition Notice”) seeking a deposition of a Committee

representative on less than two business days’ notice for Monday, May 7, 2018 at 9:00 a.m.

Eastern time; and (2) striking the amended document requests (the “Document Requests” and

together with the Deposition Notice, the “Debtors’ Discovery”) served by the Debtors

demanding production of documents by the Committee by the date of such deposition (aside

from Document Request #6 – “All Documents the UCC intends to rely upon or otherwise use in

connection with its Objection at the Sale Hearing.”).3 The Deposition Notice is attached hereto

as Exhibit A and the Document Requests are attached hereto as Exhibit B. A proposed form of

order approving this Motion is attached hereto as Exhibit C. In support of this Motion, the

Committee respectfully represents as follows:

Preliminary Statement

1. The Committee has filed a preliminary objection to the Sale Motion and

intends to file a supplement thereto, both of which are narrow in scope. In the filed objection,

the Committee raised: (a) purchase price allocation issues to protect value for unsecured

creditors, (b) the need to preserve the Debtors’ books and records for use by the estates and any

future litigation trustee, and (c) the impropriety of selling the Debtors’ avoidance actions. A

3
The Committee will produce documents responsive to Document Request #6, if any, promptly after such
documents become available.

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supplemental objection will address any viable overbids (if such overbids are presented) that

should be considered by the Court with good cause for a late submission – all with the goal of

maximizing recoveries for stakeholders.

2. The Debtors’ Discovery has nothing to do with the filed objection and

appears to be punitive and harassing in nature (especially given the timing of it), and not targeted

to any issues relevant to the disputes at issue with respect to the Sale Motion. The Debtors’

Discovery is premature as to any possible supplementary objection and appears to be an effort to

intimidate the Committee against any possible support for a viable overbidder – an

unconscionable tactic by a fiduciary. Among other things, the Debtors seek information and

documents (much of which is privileged in nature) concerning communications amongst the

Committee, communications with victims/survivors of sexual assault, harassment, and black-

listing by former officer and director Harvey Weinstein, and analyses performed by the

Committee regarding the Lantern bid, the Inclusion Media Expression of Interest,4 and the assets

and liabilities of the Debtors’ estates.5 See Deposition Notice at Topic #3 and Document

Requests at Request #3 (“All Communications between or among the UCC and any Unsecured

Creditors, including but not limited to Alleged Victims, concerning the Lantern Bid and/or the

Inclusion Media Expression of Interest.”), Topic #4 and Request #4 (“All Documents and

Communications concerning the UCC’s evaluation of (i) the Lantern Bid, (ii) any other bid filed

in connection with the Sale and (iii) the “alternatives” to the Lantern Bid referred to in the

Objection, including but not limited to liquidation and/or the Inclusion Media Expression of

Interest.”), Topic #5 and Request #5 (“All Documents and Communications concerning the

4
There is no formal bid from Inclusion Media as yet and the Committee has not taken a position in support of any
such potential bid, hence there is no basis to conduct discovery on this point under current circumstances.
5
The time period covered by the Debtors’ Discovery is March 19, 2018, through the present. The Committee was
not even formed until March 28, 2018.

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UCC’s analysis of valuations or estimates of recoveries in bankruptcy of any unsecured creditors

(including, for the purpose of this request, unsecured creditors who are members of the UCC) or

group of unsecured creditors under (i) the Lantern Bid, (ii) any other bid filed in connection with

the Sale, and (iii) any of the “alternatives” referred to in the UCC Objection, including but not

limited to liquidation and/or the Inclusion Media Expression of Interest.”). None of the

foregoing is non-privileged and/or relevant to the Sale Motion. The Debtors’ Discovery also

specifically requests communications with “Alleged Victims” as if there is some dichotomy or

conflict amongst the interests of victims/survivors and other unsecured creditors. Nothing could

be further from the truth. The Committee’s ultimate goal is to maximize value for all unsecured

creditors.

3. The question raised by the Committee’s objection to the Sale Motion is

not what communications the Committee may have had with victims/survivors or how the

Committee allocates value from the Lantern bid, but rather how the Debtors and the bidder

intend to do so. The problem is that neither the Debtors nor Lantern has made a proposal in this

regard except to take the position that certain secured debt must be paid out of sale proceeds.

Specifically, based upon depositions of the Debtors’ and Lantern’s representative conducted

earlier this week, the following admissions have come to light:6

 The Debtors have reached no conclusions regarding the amount of sale proceeds

that will be available to satisfy unsecured claims assuming that the Lantern sale

closes.

6
Certain deposition testimony was deemed confidential by the Debtors. The Committee is prepared to submit the
deposition transcripts or excerpts thereof to the Court in camera to the extent necessary.

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 The Debtors have not conducted more than a superficial and incomplete lien

analysis of any secured claims.7

 The Debtors do not know whether they will have an allocation of sale proceeds by

the time of the sale hearing scheduled for May 8, 2018.

 The Debtors have conducted no analysis of the value of avoidance actions

proposed to be sold to Lantern.

 The Debtors have not done a current valuation of their film library, unreleased

titles, or television assets.

 Lantern has refused to provide any information or to answer any questions

regarding its allocation of the purchase price from the sale.

Exhibit D and Exhibit E attached hereto are exhibits to the deposition transcripts that provide a

sense of the limited information that has been made available to the Committee to reach any

conclusions of its own.

4. The Debtors’ Discovery is unduly burdensome, overbroad, unnecessary,

irrelevant and delves into privileged matters. The Committee does not currently have any non-

privileged document that it intends to use in connection with any objection to the Sale Motion

that was not created by the Debtors or Lantern, or is otherwise publicly available, and therefore,

is already in the possession of the Debtors or Lantern. If any such additional non-privileged

document is identified or created, it will be produced to the Debtors. The communications that

the Committee has had with Lantern, Inclusion Media, and others have been conducted through

counsel, not the members of the Committee. There is no witness as of now that the Committee

can offer in response to the Deposition Notice knowledgeable about the topics listed, except

7
The Committee, MUFG Union Bank, and UnionBanCal Equities, Inc. have stipulated regarding certain of the
Committee’s challenge rights based on the Committee’s due diligence. [Docket No. 642].

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counsel to the Committee, and the testimony of such attorney would be highly constrained given

privilege limitations and irrelevant to the Committee’s objection. Of course, to the extent that

the Committee decides to call any witness or to use any document at the sale hearing, such

witness will be made available to the Debtors for deposition in advance and any such document

will be produced. Document Request #6 goes to this point.

5. In sum, except for Document Request #6, the purpose of the Debtors’

Discovery is to harass and distract the Committee from the tasks at hand, rather than to identify

any possibly relevant and non-privileged information relating to the Committee’s filed objections

to the Sale Motion. For these reasons, the Debtors’ Discovery should be quashed and/or stricken

in its entirety, except for Document Request #6 as noted below.

Relief Requested

6. By this Motion, pursuant to Rule 26 of the Federal Rules of Civil

Procedures (the “Federal Rules”), made applicable to this matter by Bankruptcy Rules 7026 and

9014(c), and Local Rules 7026-1 and 7030-1(c), the Committee requests a protective order,

substantially in the form attached hereto as Exhibit C, quashing the Deposition Notice and

striking the discovery embodied in the Document Requests (aside from Document Request #6 –

“All Documents the UCC intends to rely upon or otherwise use in connection with its Objection

at the Sale Hearing.”).8

Basis for Relief

7. Federal Rule of Civil Procedure 26 limits the discovery that a party may

obtain to “any nonprivileged matter that is relevant to any party’s claim or defense and

proportional to the needs of the case, considering the importance of the issues at stake in the

8
The Committee will produce documents responsive to Document Request #6, if any, promptly after such
documents become available.

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action, the amount in controversy, the parties’ relative access to relevant information, the parties’

resources, the importance of the discovery in resolving the issues, and whether the burden or

expense of the proposed discovery outweighs its likely benefit.” Fed. R. Civ. P. 26(b)(1)

(emphasis added).

8. Rule 26(c)(1) further provides, in relevant part:

The court may, for good cause, issue an order to protect a party or
person from annoyance, embarrassment, oppression, or undue
burden or expense, including … [by] forbidding the disclosure or
discovery….

Fed. R. Civ. P. 26(c)(1). The decision whether to enter a protective order lies within the Court’s

discretion. See, e.g., Pearson v. Miller, 211 F.3d 57, 65 (3d Cir. 2000). Courts can limit

discovery “if the parties seek duplicative or cumulative information ... or the burden outweighs

the benefit.” United States v. Federation of Physicians & Dentists, Inc., 63 F. Supp. 2d 475, 478

(D. Del. 1999). While the Federal Rules of Civil Procedure unquestionably allow broad

discovery, a right to discovery is not unlimited. Hickman v. Taylor., 329 U.S. 495, 507 (1947);

Hancock Indus. v. Schaeffer, 619 F. Supp. 322, 331 (E.D. Pa. 1985) (“Discovery, however, is not

to be a fishing expedition.”).

9. In addition, Local Rule 7030-1(c) provides as follows:

Motions to Quash. Any party seeking to quash a deposition must


file a motion with the Court under Fed. R. Civ. P. 26(c) or
30(d). If such motion is filed at least one (1) business day before
the scheduled deposition, neither the objecting party, witness, nor
any attorney is required to appear at a deposition to which a motion
is directed until the motion is resolved.

10. Here, the Debtors’ Discovery (except for Document Request #6) should be

quashed and/or stricken because it is unduly burdensome, overbroad, unnecessary, irrelevant,

and delves into privileged matters.

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11. First, this Motion should be granted for failure to provide reasonable

notice. The timing of the Debtors’ Discovery served at 11:31 p.m. Eastern time on less than two

business days’ notice is unreasonable and impossible to achieve. Federal Rule 30(b)(1) requires

“reasonable written notice” to parties to attend a deposition. Importantly, Local Rule 7030-1

provides: “Unless otherwise ordered by the Court, ‘reasonable notice’ for the taking of

depositions under Fed. R. Civ. P. 30(b)(1) shall not be less than seven (7) days.” (emphasis

added). Less than two business days’ notice does not come close to satisfying the reasonableness

requirement under Federal Rule 30(b).

12. Second, this Motion should be granted because the Debtors’ Discovery

seeks information that is not relevant to the Sale Motion. The Committee’s objections are

narrowly focused on: (a) ensuring that value is properly allocated to unencumbered assets, and

(b) preserving the sanctity of the bidding process to ensure that all viable bids are thoroughly

considered. The Debtors’ Discovery is irrelevant to either category. As an example, the Debtors

seek information and documents (much of it privileged in nature) concerning communications

amongst the Committee, communications with victims/survivors of sexual assault, harassment,

and black-listing by former officer and director Harvey Weinstein, and analyses performed by

the Committee regarding the Lantern bid, the Inclusion Media Expression of Interest,9 and the

assets and liabilities of the Debtors’ estates. See Deposition Notice at Topic #3 and Document

Requests at Request #3 (“All Communications between or among the UCC and any Unsecured

Creditors, including but not limited to Alleged Victims, concerning the Lantern Bid and/or the

Inclusion Media Expression of Interest.”), Topic #4 and Request #4 (“All Documents and

Communications concerning the UCC’s evaluation of (i) the Lantern Bid, (ii) any other bid filed
9
As noted above, there is no formal bid from Inclusion Media as yet and the Committee has not taken a position in
support of any such potential bid, hence there is no basis to conduct discovery on this point under current
circumstances.

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in connection with the Sale and (iii) the “alternatives” to the Lantern Bid referred to in the

Objection, including but not limited to liquidation and/or the Inclusion Media Expression of

Interest.”), Topic #5 and Request #5 (“All Documents and Communications concerning the

UCC’s analysis of valuations or estimates of recoveries in bankruptcy of any unsecured creditors

(including, for the purpose of this request, unsecured creditors who are members of the UCC) or

group of unsecured creditors under (i) the Lantern Bid, (ii) any other bid filed in connection with

the Sale, and (iii) any of the “alternatives” referred to in the UCC Objection, including but not

limited to liquidation and/or the Inclusion Media Expression of Interest.”).

13. Third, this Motion should be granted because the Debtors’ Discovery

seeks privileged information and documents, and little else. Communications amongst members

of the Committee and their counsel and/or members of the Committee and counsel to the

Committee are privileged and occurred with an expectation of privacy. See Sinohui v. CEC

Entm't, Inc., 2016 U.S. Dist. LEXIS 62481, **17-18 (C.D. Cal. May 11, 2016). Each of these

communications was made for the purpose of “facilitating the rendition of professional legal

services.” Post v. Killington, Ltd., 2009 U.S. Dist. LEXIS 6399, at *8-9 (D. Vt. Jan. 14, 2009)

(“Confidential communication between class members and counsel are protected by attorney-

client privilege. Confidential communications among class members made for the purpose of

facilitating the rendition of professional legal services are protected by attorney-client

privilege.”).

14. The Committee does not currently have any non-privileged document that

it intends to use in connection with any objection to the Sale Motion that was not created by the

Debtors or Lantern, or is otherwise publicly available, and therefore, is already in the possession

of the Debtors or Lantern. If any such additional non-privileged document is identified or

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created, it will be produced to the Debtors. The communications that the Committee has had

with Lantern, Inclusion Media, and others have been conducted through counsel, not the

members of the Committee. There is no witness as of now that the Committee can offer in

response to the Deposition Notice knowledgeable about the topics listed, except counsel to the

Committee, and the testimony of such attorney would be highly constrained given privilege

limitations and irrelevant to the Committee’s objection. However, to the extent that the

Committee decides to call any witness or to use any document at the sale hearing, such witness

will be made available to the Debtors for deposition in advance and any such document will be

produced.

15. The Committee is concerned that the motive behind the Debtors’

Discovery is some form of retribution, or to gain a litigation advantage by distracting the

Committee from its preparation for the hearing on the pending Sale Motion. The intent to harass,

oppress, and annoy the Committee is highlighted by the noticing of a deposition and deadline to

produce documents on less than two business days’ notice.

16. Based on the foregoing, the Committee respectfully requests that this

Court issue an order quashing the Deposition Notice and striking the discovery sought in the

Document Requests, except Document Request #6.

Certification Pursuant to Federal Rule 26(c)(1),


Bankruptcy Rule 7026, and Local Rule 7026-1

17. Pursuant to Federal Rule 26(c)(1), Bankruptcy Rule 7026, and Local Rule

7026-1, the undersigned attorneys certify that good faith efforts were made to reach agreement

on the matters that are the subject of this Motion. Counsel to the Committee has conferred with

counsel to the Debtors to resolve the disputes underlying this Motion and the discovery, but the

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parties were unable to reach agreement before filing this Motion became necessary under the

circumstances.

Notice

18. Notice of this Motion shall be given to (a) the Office of the United States

Trustee for the District of Delaware; (b) counsel to the Debtors; (c) counsel to Lantern; and (d)

any party that has requested notice pursuant to Bankruptcy Rule 2002 at the time of noticing.

The Committee submits that no other or further notice need be provided.

WHEREFORE, the Committee respectfully requests a protective order (i)

quashing the deposition sought by the Debtors, (iii) striking the discovery sought by the Debtors

in the Document Requests (aside from Document Request #6 – “All Documents the UCC intends

to rely upon or otherwise use in connection with its Objection at the Sale Hearing.”),10 and

(iii) granting the Committee such other and further relief as the Court deems just and proper.

10
The Committee will produce documents responsive to Document Request #6, if any, promptly after such
documents become available.

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Dated: May 4, 2018 PACHULSKI STANG ZIEHL & JONES LLP

/s/ Colin R. Robinson


James I. Stang (CA Bar No. (CA Bar No. 94435)
Robert J. Feinstein (NY Bar No. 1767805)
Debra I. Grassgreen (CA Bar No. 169978)
Bradford J. Sandler (DE Bar No. 4142)
Colin R. Robinson (DE Bar No. 5524)
919 North Market Street, 17th Floor
P.O. Box 8705
Wilmington, DE 19899 (Courier 19801)
Telephone: 302-652-4100
Facsimile: 302-652-4400
E-mail: jstang@pszjlaw.com
rfeinstein@pszjlaw.com
dgrassgreen@pszjlaw.com
bsandler@pszjlaw.com
crobinson@pszjlaw.com

Proposed Counsel for the Official Committee of


Unsecured Creditors

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