WeWork’s unsecured creditors say its bankruptcy is on the verge of a meltdown and the company should consider an offer from Adam Neumann’s Flow.
WeWork is seeking to raise $400 million in funding to exit bankruptcy, The Financial Times reported. The co-working company filed for bankruptcy in November after years of financial struggles.
The company’s controversial co-founder Adam Neumann made his own bid to acquire the beleaguered firm through bankruptcy. Flow has reportedly been willing to offer 10 percent more for WeWork than any other offer, but an attorney for the company claims WeWork will not even enter into a non-disclosure agreement to negotiate the deal.
Now, WeWork’s unsecured creditors, which include many of the firm’s landlords, want the company to consider Neumann’s offer.
“For the debtors to ignore potentially viable alternatives and not look for others is value-destructive and inexcusable,” said an attorney representing a committee of unsecured creditors in a court filing on Friday.
The unsecured creditors don’t have much to lose. Under WeWork’s proposed restructuring plan in February, senior lenders would own the company and whatever WeWork owes unsecured creditors would likely be wiped out. The committee for the unsecured creditors raised concerns in February that WeWork might not be able to pay its lawyers or its rent, leading to “administrative insolvency.”
WeWork recently sought to get four more months to file its bankruptcy plan, according to court filings.
But WeWork’s unsecured creditors claim things have only gotten worse. They allege the firm has not secured financing to emerge out of bankruptcy. It has negotiated less than a third of its leases and failed to pay over $40 million in rent, including several million dollars’ of April rent, the committee alleges.
The committee is willing to give WeWork 30 more days to file its plan. As a condition, WeWork has to provide Flow and other interested bidders with necessary information to make a proposal and secure financing.
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.”
“Our board and our advisers review any proposals to ensure we always act in the best long-term interests of the company,” the spokesperson said.
Neumann stepped down as WeWork CEO in 2019 after the company’s disastrous initial public offering attempt. He has made a comeback through Flow, which focuses on apartments and is backed by Andreessen Horowitz.
In early April, WeWork announced it found a path forward at 90 percent of its locations. This includes amending over 150 leases.
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