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The saga of the re-birth of WeWork


 


I wrote a post here in March about the bankrupty proceedings in regard to WeWork, a company that had attempted to arbitrage the commercial lease market. It leased temporary office space, used for example by companies in the midst of a transition, whose new digs aren't quite ready yet.  It leased such space long term from the owners of suitable properties, and subleased them short term, counting on the fact that you can get more money on a per-day basis leasing short term.

As I indicated when I wrote it up in late March, WeWork seemed o a knife's edge. Either it would end up liquidating OR it would end up being re-organized on a solvent basis. The issue would turn on how effectively it could stiff its own leasors, the building owners, in the bankruptcy process.

The situation is an unusual one because, although most businesses do pay rent to someone, including most businesses that are cash strapped enough to seek bankruptcy court protection, in the usual case this is a humdrum incidental "overhead" expense.  In this case the rent WeWork paid was more integral to its business plan -- that rent was the cost of precisely the service it was going to turn around and sell.  Legal precedents and rules designed for the former situation made an odd fit or no fit at all for the latter. 

I can now report that WeWork has been sufficiently successful in stiffing its own landlords so that it will not be liquidated. The Honorable John Sherwood has approved the restructuring plan and the company is said to be ready to emerge from bankruptcy court protection, although I have not yet seen an exact date. Any day now, it appears.    

   WeWork cleared to exit bankruptcy and slash $4 billion in debt | Reuters

I am ambivalent about this result. But I am very happy about one thing: the new WeWork has no connection with the company founder, Adam Neumann -- a litigious fellow quick on the draw with a defamation lawsuit threat.  (If he sends me one I will gladly share the news here.)  

AN has no talent other than that of selling himself as a genius to the suckers. In the whole course of his rise and fall as the great office-sharing guru, he never had any idea what he was doing, and a lot of people and institutions have paid a price for that. He also had so much arrogance that he claimed an intellectual property right to the pronoun "we".   

May he live a long life in thorough and deserved obscurity hereafter.

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