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WeWork (WE) sees its Chapter 11 reorganization efforts as progressing favorably, as long as it can secure additional financing to pay overhead expenses.
The coworking giant filed a motion in federal bankruptcy court Wednesday asking for more time to rally cooperation from stakeholders — including landlords — for a WeWork comeback, according to documents.
WeWork, which filed for bankruptcy in November, said it needs an unknown amount of cash mainly to pay rent while it works to renegotiate deals with landlords.
“We have a clear line of sight to a profitable, sustainable WeWork, having reached numerous beneficial agreements with our landlord partners to date,” a WeWork spokesperson said in a statement. “Any new financing would serve to strengthen our ongoing operations during the bankruptcy process and help progress our Chapter 11 cases to a successful conclusion.”
The company did not disclose where it is looking to source the additional financing or how much it will need to successfully come out of the other end of the bankruptcy process.
However, it sees several of its landlords — many of which have come after the company for skipping rent — as in direct opposition to the goal of keeping its locations open and retaining 2,500 employees.
WeWork said a number of landlords are demanding above-market rent and holding the struggling coworking firm on the hook for back rent and penalties. Prominent among those landlords are Kato International, which has exposure at 12 East 49th Street, and RXR, which calls WeWork a tenant at 75 Rock Plaza.
“A subset of landlords stands in the way of that goal. They failed to engage with the debtors in the first instance in favor of a ‘wait-and-see’ approach while they collect above-market rent,” the court filing read. “And they now ask this court to ignore the existence of their [letters of credit] and instead compel the immediate use of estate cash to pay post-petition rent, penalty default rates, and attorneys’ fees — a result that would meaningfully jeopardize these Chapter 11 cases and harm every other stakeholder.”
RXR did not immediately respond to a request for comment, and Kato International could not be reached.
One landlord that has withdrawn its motion to compel WeWork to pay what is owed rather than renegotiate rent has been George Comfort & Sons at 575 Lexington Avenue.
WeWork filed for Chapter 11 owing landlords at least $98.6 million in unpaid rent, and a group of them accused the coworking company of fudging bankruptcy rules by withholding $33 million in rent that came due Jan. 1.
While it’s gotten out of at least 80 leases so far, WeWork has had success renegotiating with landlords to keep several locations open around the country.
Mark Hallum can be reached at mhallum@commercialobserver.com.
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