Founder of WeWork remains a billionaire even with the company’s judicial recovery – 11/09/2023 – Market

WeWork never figured out how to make money, but Adam Neumann, co-founder and CEO until 2019, certainly did. The office leasing company filed this Monday (6) in Chapter 11 of the United States Bankruptcy Law, similar to a request for judicial recovery in Brazil.

The process comes two years after WeWork went public, in 2021, without Neumann. Today, the company has $19 billion in liabilities and $15 billion in assets. Long-time investors, including Softbank and Vision Fund, will add to the huge losses they have already made with the company.

“It has been challenging for me to watch from the sidelines since 2019 as WeWork failed to leverage a product that is more relevant today than ever before,” Neumann, 44, said in a statement.

But a part of Neumann may be grateful he was forced out in 2019 after the company’s disastrous first attempt to go public.

Although it damaged his reputation, the exit left him quite liquid, and he still has a net worth of $1.7 billion, according to the Bloomberg Billionaires Index.

Certainly, WeWork’s failure hurt Neumann’s wealth. When the company went public in a merger with a special purpose acquisition company in 2021, Neumann was worth $2.3 billion, according to the index, with nearly a third in WeWork shares. Since then, they have fallen by more than 99%.

But the deal also revealed how he was able to extract large amounts of money from WeWork in better times.

The former CEO’s name was mentioned 197 times in a merger document, alongside exorbitant payments including a $185 million non-compete agreement, a $106 million settlement payment and $578 million received by shares sold by Neumann’s We Holdings to SoftBank.

Also mentioned was a $432 million loan from the Japanese fund to Neumann, secured by part of his WeWork stake, which is now worth almost nothing.

WeWork’s bankruptcy is costing SoftBank, founded and led by billionaire Masayoshi Son, about $11.5 billion in lost equity, with another $2.2 billion in debt still at stake. The bankruptcy process is expected to take months and decide how creditors will divide the company’s remains.

New venture

Today, Neumann is busy with a new startup, Flow, which received a $350 million investment from venture capital firm Andreessen Horowitz at a $1 billion valuation in August 2022, before it even began operations. .

Flow will operate multi-family residential properties that aim to foster a sense of ownership and community.

At least some of the residential properties were already owned by Neumann. Because his own investment in the company could not be determined, Flow was not factored into Neumann’s fortune, meaning he may be even richer than Bloomberg’s estimate.

Not all of its investments outside of WeWork have done so well. Her family office fell behind on interest payments on a $31 million mortgage tied to an office building in San Jose, California, according to an October mortgage filing. Neumann invested in office buildings, some of which were leased back to WeWork, one of the conflicts of interest that sunk the company’s first IPO.

Neumann no longer leases any buildings to WeWork, according to documents, meaning he won’t be one of the landlords handling the renegotiation of leases during the bankruptcy process.

Your connections to WeWork may not be completely closed. Neumann, who no longer has a non-compete agreement with the company, has been approached about the possibility of getting involved in the business post-reorganization, according to a person familiar with the discussions, who asked not to be identified because the information is private.

Neumann’s public statement even hints at this possibility. “With the right strategy and team, a reorganization will allow WeWork to exit successfully,” he said.