FILE PHOTO: WeWork offices in San Francisco
By Dietrich Knauth
(Reuters) -WeWork founder Adam Neumann has asked a U.S. bankruptcy judge to help his bid to re-acquire the coworking business, saying Monday that WeWork’s management should engage in talks or be forced to cede control of the company’s restructuring.
Neumann’s new real estate company, Flow Global, has sought to buy WeWork out of bankruptcy, recently offering over $500 million. But Neumann said in a late Monday court filing that WeWork has refused to engage, instead seeking to use its bankruptcy court case to “rubber-stamp” a deal that would turn over control of the company to “hand-picked buyers.”
Neumann asked U.S. Bankruptcy Judge John Sherwood to consider ordering WeWork’s management to provide due diligence information to Flow Group as a condition to remaining in control of the company. WeWork’s “inexplicable” refusal to engage with Flow is “fundamentally at odds with its obligation to maximize value” under U.S. bankruptcy law, Neumann wrote.
WeWork said Tuesday that it was focused on finalizing a deal with its existing lenders that would allow the company to exit from bankruptcy within “the coming weeks.” It did not respond to questions about Neumann’s bid.
WeWork entered bankruptcy in November 2023 with a restructuring support agreement with its equity backer Softbank and its lenders, who agreed to wipe out $3 billion in debt in exchange for an equity stake in the business.
WeWork attorney Ciara Foster said in a Tuesday court hearing that no bidder had offered a better deal than that $3 billion debt restructuring.
“We do not have an actual path to a sale here,” Foster told Sherwood at a hearing in Newark, New Jersey.
Neumann and Flow did not immediately respond to a request for comment about how their proposed buyout would gain the support of WeWork’s lenders.
WeWork’s junior creditors, including a court-appointed creditors’ committee and a group of bondholders including Antara Capital, have argued that the company is rushing to get that restructuring approved in court before the deal is even finalized between WeWork and its senior lenders.
WeWork has addressed some of those concerns in recent court filings, providing more details on its go-forward business plans and saying that it will save $8 billion in future rent costs after negotiations with hundreds of landlords. WeWork’s recent filings include a new valuation estimate that says the company is worth roughly $750 million.
WeWork, once valued at $47 billion, expanded at breakneck speed but racked up steep losses before filing for bankruptcy protection.
The company struggled to achieve profitability as a rise in work-from-home trends following the pandemic soured demand for its shared office spaces.
The case is In re WeWork Inc, U.S. Bankruptcy Court for the District of New Jersey, No. 23-19865.
For WeWork: Ciara Foster and Steven Serajeddini of Kirkland & Ellis
For Neumann and Flow: Alex Spiro and Susheel Kirpalani of Quinn Emanuel
Read more:
WeWork targets Chapter 11 exit by May 31, secures $8 billion in rent reduction
WeWork explores bankruptcy loan options amid landlord dispute
WeWork founder Adam Neumann trying to buy back company
(Reporting by Dietrich Knauth)
