WeWork Creditors Move to Force Company to Court Potential Buyers
By Nick Trombola April 22, 2024 2:05 pm
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Infighting among WeWork (WE)’s managers, senior lenders and financial backer SoftBank Group has derailed the company’s reorganization and its potential sale, a faction of the coworking giant’s unsecured creditors argued in a court filing on Friday.
Since the company’s efforts to restructure have effectively stalled, the creditors argue that WeWork should be forced to negotiate with any potential buyers, including Adam Neumann, the co-founder and former CEO of WeWork whose new venture, Flow, has repeatedly offered to buy the beleaguered company.
The lenders argued in the filing, first reported by Bloomberg, that WeWork missed nearly all of its restructuring milestones while “their liquidity continues to shrink.”
In its own court filing last month, WeWork claimed that it was making strides in rightsizing its real estate portfolio and working its way out of Chapter 11 bankruptcy, which it entered in November.
A WeWork spokesperson told Commercial Observer that the company has negotiated or exited 90 percent of its leases and still aims to exit bankruptcy by May 31.
“We remain intensely focused on finishing this important work and are on track to emerge from Chapter 11 next month as a financially strong and sustainable company for the benefit of our members and partners,” the spokesperson said. “Our Board and our advisers review any proposals in the ordinary course, to ensure we always act in the best long-term interests of the company.”
Meanwhile, WeWork has at least one prospective offer from Neumann to the tune of $600 to $900 million, far more than the $400 million the company says it needs to exit bankruptcy and avoid selling. Flow and its financial partners are even willing to offer 10 percent more than any other potential buyer, Flow attorney Alex Spiro previously said in a statement.
Yet WeWork’s relationship with Neumann is far from clean. The former CEO was ousted in 2019 after a failed initial public offering and the company ever since has financially struggled to cope with its aggressive expansion made under Neumann’s tenure.
A spokesperson for Neumann did not immediately respond to a request for comment.
Nick Trombola can be reached at ntrombola@commercialobserver.com.
