Adam Neumann Makes Grand Play To Take Back Struggling WeWork

Key Takeaways:

– Adam Neumann, founder and former CEO of WeWork, is attempting to buy back the bankrupt commercial real estate company.
– Neumann launched an effort two months ago with the help of hedge fund manager Dan Loeb to buy back WeWork.
– Neumann’s latest venture, Flow, is seeking to buy WeWork for its assets and provide bankruptcy financing to keep it from folding.
– Neumann’s lawyers sent a letter to WeWork’s advisors, accusing them of stonewalling and delaying the purchase.
– Under Neumann’s leadership, WeWork attracted investment from big names on Wall Street, but the company’s losses and Neumann’s erratic management style led to a failed IPO and financial troubles.
– WeWork declared bankruptcy in November 2023, opening the door for Neumann to attempt to take back the company.
– WeWork’s challenges after bankruptcy include disputes with landlords and withholding rent payments.
– This is not the first time Neumann has tried to get involved with WeWork after his ouster. In 2022, he attempted to arrange financing to stabilize the company, but the then-CEO shut down the process.
– Neumann believes a reorganization of WeWork with the right team in charge can lead to success.
– Neumann’s new venture, Flow, may eventually compete or partner with WeWork.

inman:

In a push to wrestle back the company he co-founded, Adam Neumann on Monday sent a letter to the co-working giant pressing it to sell its assets to Flow, Neumann’s latest real estate endeavor.

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Adam Neumann, the founder and onetime CEO of WeWork, is attempting to buy back the now bankrupt commercial real estate company he was dramatically ousted from in 2019  as the limping company explores bankruptcy loan options to settle disputes with its landlords.

Neumann launched an effort two months ago to buy back the company with the help of the hedge fund manager Dan Loeb, according to details made public Tuesday in The New York Times. His push culminated in a letter sent to WeWork’s advisers on Monday by Neumann’s lawyers, pressing them to sell WeWork to Neumann’s latest venture, Flow, and advising them that Loeb’s investment services firm Third Point would help finance a transaction.

Flow is reportedly seeking to buy WeWork for its assets, and to provide bankruptcy financing to keep it from folding.

The letter also accuses WeWork’s advisors of stonewalling Neumann for several months and delaying a purchase they say would be beneficial to WeWorks’ shareholders.

“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-maximizing transaction for all stakeholders,” reads the letter written by attorney Alex Spiro, who also represents Elon Musk and Jay-Z.

Neumann’s takeover attempt is the latest twist in the 14-year saga of WeWork, which at its peak in 2019 was valued at $47 billion and was thought to represent the future of commercial real estate and workplaces in general.

Under Neumann’s leadership, the company attracted investment from some of the biggest names on Wall Street, most notably from Japanese bank SoftBank, which invested more than $10 billion in the startup and bailed it out in October 2019 when Neumann’s erratic management style, and WeWork’s enormous losses, were exposed, tanking a planned IPO and leaving the company scrambling for cash.

As the firm poured money into an aggressive expansion, opening offices in  San Francisco, Los Angeles, Seattle, Tel Aviv, London and other major cities, their returns never matched their investments, especially once demand for office space began to drop off beginning in 2020.

The company declared bankruptcy in November 2023, leaving the door open for Neumann to begin his attempt to take back the company one month later.

Immediately after the company declared Chapter 11, Neumann said in a statement that WeWork could still succeed with the right team in charge and a reorganization of its corporate structure.

“It has been challenging for me to watch from the sidelines since 2019 as WeWork has failed to take advantage of a product that is more relevant today than ever before,” he sad. “I believe that, with the right strategy and team, a reorganization will enable WeWork to emerge successfully.”

He has also said that his new venture, Flow, would eventually “compete or partner” with his former company.

WeWork’s challenges have persisted after its bankruptcy declaration, mainly in the form of disputes with its landlords. The company’s post-bankruptcy path forward is centered around significantly lower corporate rents, leading to some of its landlords accusing it of “hardball” negotiation tactics according to Reuters

The company has withheld up to $33 million in January rent from select landlords and is considering taking out further bankruptcy loans to get through its bankruptcy case.

The attempt to purchase WeWork is not the first time Neumann has involved himself with the company after his ouster. According to the letter from Spiro, in October 2022 he looked to arrange up to $1 billion in financing to help stabilize the teetering company, but the company’s then-CEO “shut down that process without explanation,” the lawyers wrote.

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Property Chomp's Take:

In a surprising turn of events, co-founder of WeWork, Adam Neumann, is making a bold move to regain control of the company. Neumann, who was ousted from WeWork in 2019, has sent a letter to the co-working giant urging them to sell their assets to his latest real estate endeavor, Flow.

Neumann's attempt to buy back WeWork comes as the struggling company explores bankruptcy loan options to resolve disputes with its landlords. In collaboration with hedge fund manager Dan Loeb, Neumann launched this effort two months ago. The details of his plan were made public in a recent article by The New York Times.

Flow aims to acquire WeWork for its assets and provide bankruptcy financing to prevent it from folding. Neumann's letter to WeWork's advisors accuses them of stonewalling him for several months and causing unnecessary delays in a transaction that would benefit all stakeholders.

This latest twist in WeWork's 14-year saga comes after the company's peak valuation of $47 billion in 2019. Under Neumann's leadership, WeWork attracted investments from prominent names on Wall Street, including Japanese bank SoftBank. However, the company's expansion efforts did not yield the expected returns, especially as demand for office spaces declined in 2020.

The company filed for bankruptcy in November 2023, opening the door for Neumann to make his move to reclaim the company just a month later. Neumann expressed confidence in WeWork's potential for success with the right team and a reorganization of its corporate structure.

Neumann's involvement with WeWork did not end with his ousting. In October 2022, he attempted to arrange financing of up to $1 billion to stabilize the company, but his efforts were shut down without explanation by the then-CEO.

WeWork's challenges persist even after its bankruptcy declaration, particularly in the form of disputes with landlords. The company has withheld millions of dollars in rent from select landlords, and there are discussions of taking out further bankruptcy loans to navigate through the bankruptcy case.

Neumann's attempt to purchase WeWork is a significant development in the company's story. It remains to be seen how WeWork's advisors will respond to his proposal and whether this move will mark a new chapter for the co-working giant.

Overall, Neumann's letter to WeWork demonstrates his determination to regain control of the company he co-founded. As the saga continues to unfold, the fate of WeWork hangs in the balance, and industry observers eagerly await the outcome.

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