Propmodo Daily

By Franco Faraudo · Apr. 24, 2024

Greetings!

It's not every day that you read about yourself in an important court document. But, that's exactly what happened yesterday when we received several objections filed in the court overseeing WeWork's bankruptcy proceedings. In today's email, we will analyze a request from Adam Neumann and his company, Flow, to have their bid to purchase WeWork considered, including a mention of yours truly.

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Now, let's dig in!

Neumann's Legal Team Alleges Misconduct in WeWork Bankruptcy Proceedings

WeWork's future remains uncertain as bankruptcy proceedings continue, including significant renegotiations of its lease obligations and outstanding debt. Amidst this, WeWork founder Adam Neumann, and his new venture, Flow, have entered the fray with a bold proposal to acquire WeWork. They have pledged to outbid any competing offers by ten percent.

Despite this aggressive bid, Neumann’s team has met resistance from the current WeWork leadership and the debtors-in-possession. They claim that these groups have refused to entertain their offer, instead opting to expedite the bankruptcy process.

Neumann's objection articulates his frustration: "Simply put, there is no cause for shortening time in the manner requested by the Debtors," it states. The objection argues that the Debtors and the RSA Parties have had full control over the timing of the proceedings since their inception. Their inability to finalize the plan as outlined by the RSA represents a self-inflicted crisis, not a legitimate 'cause' for hastening the process.

Flow’s team is also questioning why their attempt to negotiate a purchase has been ignored. They argue that the refusal to engage with them constitutes a breach of the executives’ fiduciary duty to maximize the value of the asset. The document claims that the reason for not negotiating in good faith with Flow is as clear as it is unacceptable: "The Debtors have no interest in pursuing all paths to maximize the value of their estates but rather want to use the Chapter 11 process to rubber stamp a pre-petition RSA, deliver control of WeWork to the Debtors’ own hand-picked buyers, obtain releases for those involved, and move on."

Additionally, the document hints at potential collusion involving Yardi, one of WeWork’s debtors-in-possession. It suggests that Yardi may be receiving preferential treatment in private negotiations, referencing a Propmodo article as evidence of suspicious activities: “Franco Faraudo, What is Yardi’s Relationship with WeWork, PROPMODO (Apr. 18, 2024),” which raises concerns about Yardi’s opaque financial dealings with WeWork.

Flow’s submission requests a conference with the bankruptcy judge to present their case. They believe that this meeting would not only benefit the company but also the landlords, some of whom have accepted equity in WeWork in exchange for unpaid rent.

If the court agrees to this meeting, it could be scheduled for the upcoming Monday. Flow would seek access to the necessary information to formulate a formal bid, potentially allowing the court to hear their offer and override the current course set by WeWork's leadership.

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Propmodo Daily is written and edited by Franco Faraudo with contributions from readers like you and the Propmodo team.

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