Judge Approves WeWork’s Chapter 11 Bankruptcy Reorganization Plan
By Mark Hallum May 30, 2024 12:37 pm
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It appears WeWork (WE) will meet its self-imposed deadline of exiting bankruptcy by May 31.
U.S. Bankruptcy Court Judge John Sherwood said during a Thursday hearing that he would approve the coworking firm’s plan to restructure the company through a slew of lease cancellations and handing equity over to lenders and real estate technology company Yardi Systems, which will get a 60 percent stake in WeWork.
The plan approved by the judge also helps WeWork eliminate $4 billion in debt, Reuters reported.
“We have worked closely with the largest landlords around the world, and one thing is clear: They believe in the future of the flexible office and they believe in the future of WeWork,” Peter Greenspan, global head of real estate at WeWork, said in a statement. “As global office demand continues to move toward flexible approaches, only WeWork has the technology, community and data to support landlords in creating truly outstanding offerings for modern organizations.”
WeWork has been struggling since a failed 2019 initial public offering and filed for Chapter 11 in November. Since then, the company was able to cancel 160 leases tied to 450 locations and save $8 billion.
Yardi, under a limited liability company called Cuper Grimmon, offered $337 million for its controlling stake in WeWork while other bondholders agreed to provide $112 million in financing.
In the final months of its bankruptcy proceedings, WeWork has had to contend with attempts from its co-founder and exiled former CEO Adam Neumann, who was attempting to buy WeWork. However, the $600 million to $900 million Neumann offered was not enough to gain approval from the company’s lenders, according to Reuters.
Neumann seems to have seen the writing on the wall and dropped his acquisition offer earlier this week, but told the New York Times in a statement he thought the reorganization plan “appears unrealistic and unlikely to succeed.”
As the court proceedings wind down, WeWork is also moving its Manhattan headquarters from Tower 49 to 18 West 18th Street, owned by the Schaffer family, while keeping the offices it has at Rudin’s Dock 72 on the Brooklyn waterfront, according to Bisnow.
It’s unclear how much of the 167,000-square-foot lease that WeWork holds at 18 West 18th will be allocated to its headquarters and if any of it will continue to be coworking space, but it’s about half the size of its Tower 49 lease which had roughly 300,000 square feet under WeWork’s control. WeWork gave up the Tower 49 space as part of the bankruptcy proceedings.
Mark Hallum can be reached at mhallum@commercialobserver.com.
