SoftBank Takes $14B Hit on WeWork, While Neumann Could Skip Out on $430M Loan
By Nicholas Rizzi November 9, 2023 1:00 pm
reprints
Clear winners and losers are starting to emerge in the WeWork bankruptcy.
WeWork (WE) owes at least $98.6 million to landlords and wants to get out of 69 leases, while major investor SoftBank Group revealed that it lost a total of $14.3 billion on its bet on the coworking giant. Meanwhile, the bankruptcy could get much-maligned company founder Adam Neumann off the hook on a loan, and an investment fund that lent money to WeWork might get a payback from SoftBank.
Japan-based SoftBank — which has invested about $16 billion in WeWork since 2017 — posted $6.2 billion in losses during its second-quarter earnings released early Thursday morning and said it lost about $1.5 billion from WeWork in the first half of the year, CNBC reported.
“As a company, we need to accept this reality and also need to learn the lesson from this for our future investment activity,” SoftBank’s Chief Financial Officer Yoshimitsu Goto said during the call, according to CNBC.
While the Masayoshi Son-led bank faced some financial struggle thanks to WeWork’s bankruptcy, WeWork co-founder Neumann reportedly could benefit from the fallout.
Neumann still owes millions on his $430 million personal loan lent to him by SoftBank. But instead of being personally liable, Neumann could lose his shares of WeWork if he stops paying the loan back, the Wall Street Journal reported.
The value of Neumann’s shares dropped from $500 million in the fall of 2021 to a current $4 million, so SoftBank worries he could elect to simply wash his hands of the stock and keep the rest of the loan, according to WSJ.
A spokesperson for Neumann did not immediately respond to a request for comment. Neumann released a statement after WeWork’s bankruptcy calling it “disappointing” and adding that “it has been challenging for me to watch from the sidelines since 2019 as WeWork has failed to take advantage of a product that is more relevant today than ever before.”
Neumann has been widely criticized for mismanaging WeWork while enriching himself in the process. Bloomberg estimated that Neumann pulled out more than $2.1 billion from WeWork during his tenure through stock sales, cash settlement payments and a golden parachute he got when he was pushed out of the company.
He later denied walking away with any money he didn’t earn while at WeWork and said he feared that he would go bankrupt once he left the company.
“Everyone thought it was a golden parachute,” Neumann told Andrew Ross Sorkin during a panel discussion in 2021. “It wasn’t.”
Neumann isn’t the only one who could potentially gain from WeWork’s bankruptcy. SoftBank exec Rajeev Misra lent $470 million to WeWork through a separate investment fund he manages, with SoftBank agreeing to pay back the loan if WeWork fails, the WSJ reported.
Nicholas Rizzi can be reached at nrizzi@commercialobserver.com.
