US: A New Jersey bankruptcy judge has rejected WeWork co-founder AdamNeumann’s efforts to buy back the company.
The judge ruled that Neumann’s bid wasn’t feasible because it didn’t address $4 billion of debt on WeWork’s balance sheet. Under the approved $450 million deal, with software provider Yardi Systems as the main shareholder, WeWork expects to exit Chapter 11 bankruptcy by the end of the month.
“For several months, we tried to work constructively with WeWork to create a strategy that would allow it to thrive,” Neumann said in a statement to the New York Times’ DealBook newsletter. “Instead, the company looks to be emerging from bankruptcy with a plan that appears unrealistic and unlikely to succeed.”
WeWork’s bankruptcy litigation had focused on getting money back to creditors and wiping out the billions of dollars of debt on its balance sheet. Although WeWork included a non-compete clause in Neumann’s 2019 exit agreement that prevented him from competing with or soliciting the company, the clause expired last October, and Neumann had been pursuing a takeover bid. His $650 million bid was significantly higher than the $450 million proposal from Yardi and SoftBank that the bankruptcy judge favoured earlier this month.
Neumann, who co-founded WeWork as a single coworking space in Manhattan in 2010, ultimately lost the confidence of the company’s board, which ousted him in 2019.
Since listing on the NYSE, WeWork’s share price has fallen more than 99 per cent to 12 cents, and it has been forced to lay off thousands of employees, terminate many of its leases and declare bankruptcy.
WeWork CEO David Tolley said: “Over the past six months, we have worked extremely hard to develop a plan for a reorganised WeWork that is better capitalized, more operationally efficient, and positioned for continued investment in our products and services and a return to long-term growth.”
