It’s really happening: WeWork is suing its biggest investor for going back on a $3 billion plan to rescue the company from financial ruin.
The embattled co-working space start-up has alleged that Japanese mega-conglomerate SoftBank breached its fiduciary and contractual responsibility to WeWork‘s minority shareholders when it withdrew its tender offer last week.
[Read: WeWork can be salvaged — but its turnaround plan isn’t enough]
The offer, which was signed back in December, also included $1.1 billion in debt financing for the loss-making WeWork — money the firm desperately needs if it’s going to survive much longer.
Hard Fork previously reported that ousted WeWork CEO Adam Neumann stood to personally pocket almost $1 billion from the deal.
SoftBank originally claimed it had been forced to abandon its offer out of a responsibility to its own shareholders. The fund also cited multiple criminal and civil investigations underway into WeWork‘s operation to further explain its decision.
WeWork actually hit back in Tuesday’s press release, claiming that SoftBank had full knowledge of all investigations at the time the $3 billion tender offer was signed.
WeWork is now essentially a debt collection agency
Disastrous initial public offering aside, The Financial Times noted that thousands of WeWork‘s clients have either refused to pay rent or attempted to terminate their leases in the past month.
While coronavirus lockdown measures has much of the world working from home, the New York-based start-up kept most of its 739 global offices open, intent on collecting rent despite the global economic slump.
The occupancy rate of its co-working spaces reportedly fell to 64% at the start of April, down from 79% at September’s end.
SoftBank is yet to formally acknowledge the lawsuit.