Adam Neumann is attempting to buy back WeWork, but claims his efforts are being frustrated by his former company.
The controversial WeWork founder has been lining up a rescue bid to buy the flex space office business out of bankruptcy since December, through his new firm Flow Global.
Flow, which already has $350m of backing from venture capital giant Andreessen Horowitz, said it had partnered with Third Point, a New York-based hedge fund run by billionaire Dan Loeb, for the WeWork plan.
WeWork’s own bankruptcy plan proposes handing control of the company to its senior creditors, all but wiping out shareholders. This has resulted in the company’s stock market valuation falling to just $10m.
But a letter to WeWork from Neumann’s lawyer said WeWork had “jeopardised the ability of the company to explore alternatives and has failed to maximise value for all stakeholders”.
The letter, from Quinn Emanuel, which also represents Elon Musk and Jay-Z, said: “We write to express our dismay with WeWork’s lack of engagement even to provide information to my clients in what is intended to be a value-maximising transaction for all stakeholders.”
The letter is the first overt statement of intent from Neumann that he wants to buy back the company that he founded over 14 years ago. Neumann argues that his offer would not only be better value for shareholders, but also fairer for landlords.
The letter said: “My clients stand ready to submit a detailed proposal to purchase the company or its assets that has the flexibility to allow other stakeholders, including the RSA parties, to participate and which would allow for a sharing in the upside by unsecured creditors and participating landlords.”
Neumann stepped down as CEO in 2019 after WeWork – once valued at $47bn – failed to go public.
After several restructurings and rescue packages from investors and creditors led by Softbank, WeWork filed for bankruptcy last November.
The company said it had more than $4bn in secured debt alone and that major creditors included SoftBank. Speaking at a court hearing on Monday, lawyers for landlords raised concerns that WeWork did not have enough money to cover its rent.
The letter also confirms that Neumann has been attempting to buy back control of WeWork for years.
“Concerned with the state of the business and the outlook for the company, Mr Neumann had previously worked to arrange up to $1bn of financing to stabilise WeWork in October 2022,” the lawyers’ letter said.
“Just before the meeting (while participants were literally in the air traveling), the former CEO [Sandeep Mathrani] shut down that process without explanation.”
Photo by Mark Lennihan/AP/Shutterstock (9323311a)
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