When flex-office provider Knotel struck a deal with insurance startup Rhino, the two firms failed to disclose that their CEOs were related.
Knight RE — which backstopped surety bonds Rhino issued on two Knotel leases — said it was not informed that Knotel CEO Amol Sarva was the older brother of Rhino CEO Paraag Sarva, Business Insider reported. The reinsurance company has since told Rhino that no similar bonds could be issued “due to the appearance of impropriety.”
The news comes as Knotel has struggled to pay rent at several of its New York City locations, on top of a backlog of missed payments that predates the coronavirus pandemic. In recent months, the firm has laid off nearly half of its staff, and nearly one-third of its tenants have requested some form of rent relief.
While Knight Re said it was not aware of any “actual improprieties” on the two deals, the firm could be on the hook for Knotel’s security deposits. As is, Amol Sarvo has said Knotel is looking to give back nearly 20 percent of its office space.
A spokesperson for Knotel told Business Insider that Amol Sarva was not involved in securing the bonds from Rhino. And while Rhino declined to confirm its dealings with Knotel, an executive for the firm said in a statement that its underwriting is “objective” with “no preferential treatment” to any partner. [BI] — Erin Hudson