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WeWork on the hunt for new financing 

Landlord holdouts threatening co-working company’s bankruptcy plan

WeWork on the Hunt for Fresh Financing
WeWork's David Tolleyn (CoStar, Getty)

WeWork wants more financing to get out of bankruptcy, but is still dealing with holdouts among landlords unhappy with its plan.

The company is seeking fresh funds to pay the rent on its office spaces, according to a recent court filing. The filing was reported by Bloomberg.

In an email to the publication, WeWork said the new financing would “strengthen our ongoing operations throughout the bankruptcy process.”

Earlier in the bankruptcy proceedings, major landlords resisted the company’s request for debtor-in-possession financing from SoftBank, WeWork’s top backer, concerned about exposure they would face if the restructuring collapsed. A compromise was reached for a portion of any future loans to be reserved in an account to be used for rent payments, Reuters reported; WeWork didn’t borrow any new money as part of the agreement.

WeWork has been grinding away — with some success — towards renegotiating leases with landlords keen to keep the co-working company at their properties. WeWork is also cutting some leases altogether, though, as it needs to be able to pay its bills for a reorganization plan to be approved.

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More than a dozen landlords are holding out against WeWork and claiming it is violating bankruptcy rules by failing to pay rent. The company has rebuffed those allegations, saying most landlords have access to letters of credit and surety bonds, and can also be paid through security deposits previously put down by tenants.

In a barb aimed at the holdouts, WeWork said their “requests for relief risk causing all parties to lose the forest for the trees.”

WeWork’s bankruptcy plan would see senior lenders take control of the company once it emerges from Chapter 11. Third-lien noteholders and unsecured creditors risk being wiped out by the plan.

Meanwhile, the presence of company founder Adam Neumann looms over everything WeWork does, especially after a recent revelation that Neumann is eyeing a grand return to the company with the help of hedge funder Dan Loeb. Since that discovery, however, Loeb has downplayed his role in Neumann’s plan, according to MarketWatch.

— Holden Walter-Warner

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BankruptcyCo-workingDistressOffice Leasing