WeWork Landlords Object to SoftBank Financing Plans

Attorneys representing a veritable who’s who of office landlords — including Boston Properties, Brookfield Properties and Starwood Capital — filed objections for WeWork’s request for debtor-in-possession financing, Bisnow reported. SoftBank Group, the bankruptcy co-working firm’s top backer, is the proposed DIP lender.

Under the plan, SoftBank’s Vision Fund could use letters of credit accumulated for WeWork’s leases as funds for the Chapter 11 restructuring of the co-working company. Many of the landlords have letters of credit, a payment option when distress creeps up.

Landlords are fearful of the exposure they face should the restructuring collapse.

A bankruptcy attorney representing several of the landlords pointed to a lack of new cash being put up by SoftBank, which is also seeking greater control of WeWork spaces, Douglas Rosner told Bisnow. WeWork’s motion seeks a waiver to dodge maintenance expenses at spaces if the restructuring falls apart or WeWork liquidates. Masayoshi Son’s conglomerate is also seeking liens against WeWork’s leaseholds, to the dismay of the landlords.

“They shouldn’t get all of the benefits and protections of a debtor-in-possession lender without advancing any new money,” Rosner said.

SoftBank has lost more than $14 billion from its WeWork investment.

Landlords also pointed out that WeWork stopped paying rent for November upon filing for bankruptcy on Nov. 6. Landlords want the judge to ensure they are compensated for the month.

A hearing on SoftBank’s financing motion is set for Dec. 11.

Last month, some landlords also filed objections to WeWork’s restructuring plan, incensed by the company’s timeline and strategy for shedding leases. WeWork had nearly 300 locations a couple of months ago, but 67 leases were rejected last week and the company has since filed to ditch another six.

WeWork has to balance its financial future against the relationships it has with landlords, who will ultimately play a key role in any comeback for the company.

— Holden Walter-Warner