Adam returns: The notorious founder of WeWork wants to buy back the company

By Wyatte Grantham-Phillips

Adam Neumann, the ousted co-founder of WeWork, is exploring a deal to buy back the office sharing company after expressing dismay over its bankruptcy process.

In a letter obtained by The Associated Press, an attorney representing Neumann and Flow Global Holdings said that WeWork’s former CEO had partnered up with capital sources like Dan Loeb’s Third Point and “stands ready to submit a detailed proposal to purchase the Company or its assets.”

Adam Neumann grew WeWork into one of the world’s most valuable start-ups before it all fell apart.
Adam Neumann grew WeWork into one of the world’s most valuable start-ups before it all fell apart.Credit: AP

Third Point, however, says it has not committed to such a purchase yet.

“Third Point has had only preliminary conversations with Flow and Adam Neumann about their ideas for WeWork, and has not made a commitment to participate in any transaction,” the hedge fund said in a prepared statement, which was first shared with The Financial Times on Tuesday.

WeWork filed for Chapter 11 bankruptcy in November, just months after sounding the alarm on its ability to stay in business — as the company pointed to increased member churn, financial losses and mounting needs to cut back on its real estate portfolio.

According to Monday’s letter, written by attorney Alex Spiro, Neumann and his affiliates have been attempting to obtain information from WeWork necessary for a purchase offer since December but have been met with a “lack of engagement” from the company. They still do not have access.

These actions have jeopardised WeWork’s ability to explore options outside of its restructuring agreement, the letter added, and “failed to maximise value for all stakeholders” as a result.

In a statement, a WeWork spokesperson said the New York-based company receives “expressions of interest from external parties on a regular basis” and always reviews such approaches while aiming to act in WeWork’s best interests.

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“We continue to believe that the work we are currently doing — addressing our unsustainable rent expenses and restructuring our business — will ensure WeWork is best positioned as an independent, valuable, financially strong and sustainable company long into the future,” the spokesperson added.

WeWork, founded by Neumann and  Miguel McKelvey back in 2010, had a meteoric rise before a stunning fall.
WeWork, founded by Neumann and Miguel McKelvey back in 2010, had a meteoric rise before a stunning fall.Credit: Bloomberg

Attorneys for WeWork have recently signalled the need for more liquidity during bankruptcy proceedings, with the company notably withholding hefty rent payments to certain landlords as it attempts to renegotiate leases. In Monday court proceedings, lawyers for some landlords said this violates bankruptcy rules, The Wall Street Journal and others reported.

Neumann founded WeWork with Miguel McKelvey back in 2010. In its early years, the startup promised to revolutionise workspaces and saw a meteoric rise — once reaching a valuation as high as $US47 billion ($72 billion) — but over time, WeWork’s operating expenses soared and the company relied on repeated cash infusions from private investors.

The company went public in October 2021 after its first attempt to do so two years earlier collapsed spectacularly. That debacle led to the ousting of Neumann, whose erratic behaviour and exorbitant spending spooked early investors. He walked away with $US1.7 billion, earning him the title of the “most hated man in America.” 

Japan’s SoftBank stepped in to keep WeWork afloat, acquiring majority control over the company.

Neumann’s bid was first reported on by The New York Times’ DealBook.

Before it fell into bankruptcy, WeWork had been trying for years to deliver a turnaround story — one in which the rowdy co-working startup transforms into a stable, profitable public company. After the pandemic, the New York-based firm was bleeding cash with onerous leases. The company listed $US19 billion of liabilities and $US15 billion of assets in its Chapter 11 filing last year.

Neumann is still worth an estimated $US1.7 billion, according to the Bloomberg Billionaires Index.

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Source: Thanks smh.com