DOJ, WeWork Strike Deal To Keep List Of Coworking Tenants Private
WeWork and its landlords can breathe a sigh of relief after a bankruptcy judge signed off on the company’s request to keep its tenant list private.
A Justice Department official last month asked New Jersey Bankruptcy Court Judge John Sherwood to compel the bankrupt coworking firm to release its list of customers. WeWork pushed back, saying in a court filing that its customers were its “most important asset,” and their revelation would allow “competitors, landlords, and brokers … [to] take advantage of this wealth of information to intensify their poaching of [the company’s] customers.”
WeWork and the U.S. Trustee under the DOJ reached a deal this week to keep the list private, CoStar reported, and Sherwood signed an order Wednesday affirming the names and contact addresses of customers can be redacted.
The U.S. Trustee can still ask the bankruptcy court to reveal the names of those customers at the end of the Chapter 11 process, Sherwood said.
The official committee of WeWork’s unsecured creditors — which includes representatives from Nuveen, Beacon Capital Partners, Carr Properties and Hudson Pacific Properties — filed a statement with the bankruptcy court insisting that the tenant list be kept out of public view.
A WeWork spokesperson declined to comment.
The back and forth is just the latest chapter of WeWork’s efforts to reorganize in New Jersey bankruptcy court, where the firm — once valued at $47B — is looking to slash its enormous lease obligations to office landlords across the globe. WeWork is seeking to cut its annual rent payments by more than $500M in an effort to reemerge as a viable company from bankruptcy.
The court approved the nearly $700M debtor-in-possession package with SoftBank that prevents landlords from drawing letters of credit en masse at the end of the month and grants SoftBank and other WeWork creditors certain liens against the coworker’s leases. While some of the debtors opposed the DIP financing, attorneys for the unsecured creditors committee acknowledged in filings that there was no better option available.
WeWork has said in court filings it hopes to have a final restructuring plan in place in the spring. Sherwood approved its initial motion to reject 67 of its leases and approved a second motion this month to reject an additional five leases. The majority of those locations are in New York City.
There is roughly $2.5B of commercial real estate debt tied to the leases WeWork has either rejected or locations it no longer lists on its website, Barclays estimated. Total CMBS exposure to WeWork locations is north of $8B, according to Trepp.
