Adam Neumann has formally admitted defeat in his quest to purchase again WeWork, ending his bid to amass the co-working firm, which he helped present in 2010 and constructed into a world enterprise valued at $47 billion earlier than it fell into chapter 11 final 12 months.
“For a number of months, we tried to work constructively with WeWork to create a technique that may permit it to thrive,” Mr. Neumann mentioned in an announcement to the DealBook publication. “As an alternative, the corporate appears to be rising from chapter with a plan that seems unrealistic and unlikely to succeed.”
The writing was on the wall for weeks. Mr. Neumann stepped down as WeWork’s chief govt in 2019 below strain from administrators and buyers, after the corporate did not go public amid questions on its enterprise mannequin and company governance. It marked a shocking fall for Mr. Neumann, the corporate’s charismatic frontman.
However in February, DealBook reported that Mr. Neumann was planning an audacious transfer to purchase again the corporate.
His new actual property firm, Movement, which is backed by Andreessen Horowitz, the enterprise capital agency, supplied greater than $500 million. The plan was to purchase WeWork or its property, and inject chapter financing to maintain it afloat.
However WeWork discovered a special lifeline. A U.S. chapter decide final month accredited a restructuring deal that basically worn out $4 billion in firm debt. It additionally included $450 million in new funding from SoftBank, the Japanese know-how investor that has backed WeWork from its early days, enabling it to exit Chapter 11 chapter.
WeWork has been busy renegotiating leases in an effort to shed $11 billion in hire obligations. The rise of hybrid work for the reason that coronavirus pandemic has hit the business actual property sector laborious. A surge in vacancies has helped corporations like WeWork rework offers with landlords, however has additionally forged doubts over the expansion potential of the shared-office enterprise mannequin.
