Adam Neumann says WeWork refuses to hand over information

Adam Neumann claims WeWork, which he co-founded and led until 2019, is not giving him a fair shot to buy the struggling company out of bankruptcy.

Neumann’s new company Flow is reportedly willing to offer 10 percent more for WeWork than any other bidder, but an attorney for Flow alleges WeWork is refusing to enter into a non-disclosure agreement to move negotiations along.

Last week, a group of unsecured creditors — fearing they will otherwise end up with nothing — asked WeWork to consider Flow’s offer. Now, WeWork’s former CEO is making a personal plea to the bankruptcy court.

Neumann claims he reached out to WeWork and its advisers in December to discuss his interest in acquiring WeWork or its assets through bankruptcy. Flow hired an attorney to negotiate a non-disclosure agreement with WeWork, a standard part of the process so prospective buyers can get a company’s internal information to make an informed bid.

But Neumann alleges the debtor’s advisers have yet to return a signed NDA or provide  information Flow needs to make an offer.

“Nearly 10 weeks have elapsed, and the debtors have never clarified what issues with the NDA remain outstanding,” Neumann’s lawyers said in a court filing.

Neumann sent another proposal to WeWork last month. It included a signed term sheet and offer to provide debtor-in-possession financing. But WeWork will still not sign an NDA with Flow, according to Neumann.

Neumann’s lawyers argue WeWork has no interest in maximizing value in a sale. Rather, they allege, the company wants to line up “hand-picked buyers, obtain releases for those involved, and move on,” Neumann’s lawyers said in a court filing.

The response from WeWork’s former CEO comes just days after WeWork’s unsecured creditors, which include many of the firm’s landlords, asked the company to consider Neumann’s offer.

Under WeWork’s proposed restructuring plan, senior lenders would take control of the firm and debts owed to unsecured creditors would likely be wiped out. A committee for the unsecured creditors warned in February that WeWork might not be able to pay its lawyers or its rent, leading to “administrative insolvency.”

WeWork’s spokesperson said the company is on “track to emerge from Chapter 11 next month as a financially strong and sustainable company for the benefit of our members and partners.”

WeWork filed its financial projections and valuations on Monday. It projected the reorganized company to be worth between $650 million and $850 million. WeWork stock rose 17 percent Tuesday to 14 cents per share, putting its market capitalization at $7.5 million.

WeWork estimates it will lose $15 million this year on revenue of $1.2 billion. It said it has reached agreements to amend leases at 170 locations, while exiting more than 160, which will save $800 million annually in rent.

“This significant work is expected to result in the elimination of over $8 billion in total future rent commitments, viable economics throughout our real estate portfolio and a high-quality footprint that ensures we remain one of the world’s largest flexible work providers,” said a spokesperson for WeWork.

Many of the expensive leases the company is shedding date back to its hypergrowth period under Neumann. The company’s board of directors eventually paid its big-spending CEO a huge buyout and set about forging a path to profitability, but never got there. It filed for bankruptcy in November.

The committee for unsecured creditors said it is willing to give WeWork a month to file its proposal. But as a condition, WeWork has to provide Flow and other potential buyers with information to make a proposal and land financing.

Neumann left WeWork after the company’s failed initial public offering attempt. His new company, Flow, focuses on apartments and is backed by Andreessen Horowitz.