WeWork's founder Adam Neumann and his real estate firm, Flow, have put together a finance package to buy WeWork out of bankruptcy.
👉 Background: WeWork is the co-working space business that saw its value drop by 99.91% in less than 5 years from a peak of $47 billion USD, due to a number of challenges. By November 2023, the company declared bankruptcy.
👉 What happened: But now, WeWork's founder Adam Neumann and his real estate firm, Flow have put together a finance package to buy WeWork out of bankruptcy—which is supposedly worth over $766 million.
👉 What else: Adam Neumann sees WeWork as a turnaround story waiting to happen and wants back in. But given WeWork's declared bankruptcy, he might not have much power in getting this deal over the line.
💡In bankruptcies, there’s a legal hierarchy that dictates how stakeholders get paid.
💡Generally, lenders and other creditors get first dibs on any cash that's available and shareholders get whatever's left over... which often isn't much.
💡Adam Neumann does hold some equity in WeWork, but the value of that is effectively worthless right now. Since WeWork's creditors and lenders legally have more bargaining power than Neumann, he would need to come up with a way to repay WeWork's creditors for his offer to hold merit.
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