WeWork Moves Forward On New Financing As Neumann Bashes Restructuring Plan
The fight over WeWork’s post-bankruptcy future heated up over the weekend as the beleaguered coworking giant prepares for a hearing on Monday.
Lawyers from all sides flooded the courts and took action. WeWork filed an amended plan to exit bankruptcy, exiled founder Adam Neumann filed a declaration asking to block that plan and some landlord attorneys called for an examiner to step in.
In a 190-page filing Friday night, WeWork announced that it finalized a deal for debt financing, subject to court approval. The deal provides up to $50M to support the company until it emerges from bankruptcy and $400M in post-petition funding, which would cover administrative expenses.
WeWork declined to comment.
WeWork’s previous filings state that it could have as much as $443M in administrative claims, including unpaid post-petition rent that the company has withheld.
Meanwhile, Neumann revealed that his Flow Group made an offer to purchase WeWork or its assets for $650M, more than the $500M offer previously reported.
In the filing, Neumann said that WeWork’s current deal trades lenders' new money for 80% of WeWork’s equity to Cupar Grimmond and other stakeholders and is a 34.6% discount to the company’s estimated midpoint equity value of $765M.
Neumann further called WeWork’s amended plan “unsustainable” and said that the company is “woefully undercapitalized and would become cash-flow negative by 2025, and would fully deplete their cash by 2027.”
Flow did not respond to a request for comment.
In another declaration filed Friday, Jamie Baird, a partner with PJT Partners, said that WeWork’s lenders were willing to provide financing but would not consent to WeWork taking funds “provided by any third party, including the Flow Parties.”
“If the Debtors pursued a new DIP financing proposal lacking their consent, they may seek to terminate the consensual use of cash collateral, accelerate the DIP LC Facility, and terminate the RSA,” the filing said.
At the same time, various attorneys are debating appointing an examiner to investigate the case as an independent third party. Requests for an examiner have been filed since at least February, but at 11:27 p.m. ET Friday, an adjournment request dismissing the motion calling the examiner was made.
In the filing, the lawyers, who work on behalf of landlords, state that they received consent from all parties to dismiss the request for an examiner.
Saturday morning, counsel to landlord Kato International said in a filing that they did not consent to the adjournment filing and that voicemails that they left before the filing were not returned.
The attorneys behind the filing did not immediately respond to Bisnow’s request for comment.
“I’m shocked and appalled as to what’s occurred,” Jack Rose, one of the attorneys on Saturday’s objection, told Bisnow, referencing the adjournment filing regarding the examiner.
