WeWork founder Neumann wants bankruptcy court's help in bid to repurchase company (updated)

Wework

23/04/2024 21:54

(Updates with additional comment from WeWork)
    By Dietrich Knauth
       April 23 (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)
 ((Dietrich.Knauth@thomsonreuters.com;))