Has WeWork Finally Shut the Door on Neumann?

As WeWork receives court approval to a $450 rescue plan from its senior creditors, has Adam Neumann finally been shut out in his bid to buy back the company?

The proposed deal will be voted on by creditors on May 30th.  Yardi Systems, a real estate technology provider that is a vendor and creditor to WeWork, has agreed to put up $337mn, equating to 60% of the restructured company.  A separate group of hedge funds will put in the $113mn balance of the new money investment, in exchange for 20%. The remaining 20% will go to those that hold the $4bn of WeWork’s pre-bankruptcy debt.  This includes SoftBank, WeWork’s biggest backer.

The new WeWork will carry no debt.

WeWork chief executive officer, David Tolley, thanked the company’s board, financial stakeholders and employees “for their continued efforts to re-establish WeWork as a strong and sustainable company”.

He added: “Over the past six months, we have worked extremely hard to develop a plan for a reorganised WeWork that is better capitalised, more operationally efficient, and positioned for continued investment in our products and services and a return to long term growth.”

That hard work has seen WeWork cut its long-term lease obligations by more than $8bn; cancelling about 150 leases and renegotiating a similar number, leaving only around 150 untouched.

The firm filed for Chapter 11 bankruptcy in the US back in November.  This deal could see it exit from that at the end of May.

Neumann’s only remaining card would appear to be paying off the $4bn pre bankruptcy debt in full.

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