Coworking giant WeWork filed for bankruptcy in the United States today. The company struggled to recover from the effects of Covid-19 on the economy and its failed initial public offering in 2019. The New York-based corporation filed a Chapter 11 filing in New Jersey, stating that its assets and liabilities were between $10 billion and $50 billion. The filing allows WeWork to keep operating while it works out a plan to repay its debts.
Adam Neumann, the former CEO of WeWork founded the company in 2010 and by 2019, it was worth $47 billion. He stated that the bankruptcy filing is “disappointing” and it has been hard for him to watch the company struggle. However, the 44-year-old most certainly still has a large net worth, in contrast to many founders whose fortunes have vanished along with their companies.
When Mr Neumann left the company, a significant amount of wealth was accumulated as it prepared for another public offering- time through a special purpose acquisition company (SPAC). In 2021, Mr Neumann reportedly received $480 million from SoftBank for half of his remaining WeWork stock as part of that SPAC process. He filed a lawsuit after the investment giant first tried to back out of purchasing the entirety of his $1 billion stake, as per a report in CNBC.
According to reports, Mr Neumann also received an additional $185 million as payment for a non-compete agreement and an additional $106 million as settlement. Overall, it is believed that Mr Neumann made over $770 million in cash from the 2021 SPAC process alone, despite having been removed from a management position years ago.
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As per Bloomberg, when WeWork debuted in 2021, the former CEO still had a stake in the company valued at $722 million. Although it is unclear as to how many shares he owns currently, all those have become “worthless” after the bankruptcy filing.
Post a commentDiscussing the company’s bankruptcy, Mr Neumann told CNBC in a statement, “As the co-founder of WeWork who spent a decade building the business with an amazing team of mission-driven people, the company’s anticipated bankruptcy filing is disappointing. It has been challenging for me to watch from the sidelines since 2019 as WeWork has failed to take advantage of a product that is more relevant today than ever before. I believe that, with the right strategy and team, a reorganization will enable WeWork to emerge successfully.”