PYMNTS MonitorEdge May 2024

Co-Founder Adam Neumann Abandons Attempt to Buy Bankrupt WeWork

WeWork

Shared-workspace company WeWork has faced significant challenges in recent years, including bankruptcy and the ousting of its co-founder Adam Neumann.

Neumann, who had been trying to regain control of the company since his resignation under pressure from the board in 2019, has now given up on buying WeWork, The Wall Street Journal reported Tuesday (May 28).

In a statement, Neumann expressed his disappointment with WeWork’s bankruptcy plan, stating that it appears unrealistic and unlikely to succeed, according to the report.

Reached by PYMNTS, WeWork declined to comment on the report.

The company filed for bankruptcy in November due to a downturn in the office real-estate market and the impact of the COVID-19 pandemic, which led to a decrease in demand for office space, per the report.

WeWork had been struggling even before the pandemic, as its high cost of rent and low occupancy rates posed significant challenges, according to the report. Despite amending or canceling hundreds of leases since 2019, the company continued to face financial difficulties.

Neumann co-founded WeWork in 2010 with Miguel McKelvey. The startup quickly gained attention and raised billions from investors, becoming the country’s most valuable startup with a valuation of $47 billion by early 2019, the report said. Neumann played a crucial role in marketing WeWork as a tech business that would revolutionize the property sector.

However, Neumann’s behavior and management decisions garnered attention and criticism, per the report. The company’s financial losses led to his resignation as CEO in 2019. Since then, he had been attempting to regain control of WeWork.

In March, Neumann made an offer of $650 million to buy the company, backed by his new real estate company, Flow, according to the report. However, WeWork rejected the offer, citing its nearly $4 billion in secured debts. The company’s secured lenders did not want new third-party loans that would take priority over their secured loans.

In April, a bankruptcy court approved WeWork’s plan, which gives control of the co-working business to its service partner, Yardi Systems, per the report.

WeWork was one of a number of once high-flying companies that either filed for bankruptcy or closed shop in the last months of 2023, with tech companies running out of time and funds and venture capital firms beginning to cut their losses.