WeWork’s Updated Bankruptcy Exit Strategy: Yardi Takes 60% Stake, SoftBank’s Role Diminished

WeWork revealed on Monday that Yardi Systems, a property management software provider, is positioned to acquire a 60% stake in the company. 

In a statement published Monday, WeWork said that the bankruptcy court approved its Disclosure Statement and “several additional key motions, paving the way for the company to conclude its financial and operational restructuring and successfully emerge from Chapter 11 by the end of May.”  

The company also shared that it has secured a “$450 million new-money financing facility” that will provide support “during its Chapter 11 cases and enable WeWork to promptly emerge from restructuring upon confirmation of the Plan.” 

The deal, which must still be approved by WeWork’s Creditors, has Yardi Systems contributing $337 million through its affiliate Cupar Grimmond LLC. — which covers the majority of the coworking giant’s $450 million bankruptcy exit plan.  

According to WeWork, “Securing this financing demonstrates the support and confidence in WeWork’s business model and value proposition from its largest stakeholders. Additionally through its Plan, WeWork expects to eliminate all of its $4 billion of outstanding, prepetition debt obligations.” 

BisNow reports that under the proposed financing deal WeWork’s senior lenders have agreed to provide $50 million in interim funding to sustain operations until the anticipated bankruptcy conclusion on May 31. Afterwards, an additional $400 million will be allocated to cover various restructuring and bankruptcy exit expenses.  

According to a report published by Bloomberg, if the restructuring is carried out, the Japan-based conglomerate SoftBank, previously WeWork’s largest lender and investor, will see its equity reduced to approximately 16.5%. However, SoftBank’s stake has the potential to increase to 36% if certain financial benchmarks are not met under the new plan.  

A final confirmation hearing is scheduled for May 30, and it will officially determine the final exit plan — potentially allowing WeWork to emerge from bankruptcy on its goal of May 31.  

Notably, if the plan is approved, the company will operate at less than half its pre-pandemic size. According to BisNow, an execution of this plan would leave WeWork with 337 locations around the world — including 178 across 38 cities in the U.S. and Canada. 

While WeWork’s ousted co-founder and ex-CEO Adam Neumann sought to regain control through a $650 million bid through his new venture Flow. However, Judge John K. Sherwood maintains that it is up to the lenders to decide whether to consider Neumann.   

The proposal is reported to have backing from most owners of WeWork’s $4 billion in senior debt and a committee of unsecured creditors. Neumann could further challenge the proposal, but his offer would need support from many of these senior lenders.   

As WeWork navigates this critical juncture, the transition of ownership to Yardi Systems and the reduced influence of SoftBank signal a new chapter for the coworking pioneer. The company’s ability to stabilize financially and adapt to the evolving demands of the future of work will be closely watched by the industry and its stakeholders.