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Moments prior to WeWork’s filing of Chapter 11 bankruptcy protection on Monday, Adam Neumann, the company’s co-founder and former CEO, expressed his sadness about the expected action.
Neumann conveyed in a statement, “As the co-founder of WeWork who dedicated ten years to building the business with an exceptional group of purpose-driven individuals, I feel disheartened by the projected bankruptcy filing.”
On January 19, 2023, Israeli-American entrepreneur Adam Neumann addressed the Israeli American Council (IAC) 8th annual national summit in Austin, Texas. (Shahar Azran/Getty Images/Getty Images)
Neumann’s statement continued, “Since 2019, when WeWork failed to capitalize on a product that is now more pertinent than ever, it has been difficult for me to observe from the sidelines. I genuinely believe that, with the right strategy and team, restructuring will lead to WeWork’s successful resurgence.”
Neumann served as WeWork’s CEO from its establishment in 2010 and oversaw the office-sharing company’s ascent to an estimated valuation of $47 billion in 2019 when it initially attempted to go public. However, this endeavor was terminated due to investor concerns regarding the company’s substantial debt and substantial losses.
WEWORK declares bankruptcy: The downfall after being valued at $47 billion in 2019
Later that year, Neumann was ousted following investor dissatisfaction with his extravagant spending and controversial conduct. Nonetheless, he received a substantial financial severance package upon departure.
WeWork’s major supporter, Japanese conglomerate SoftBank, assumed control of the company with a rescue plan and offered Neumann a payout of roughly $1.7 billion, enabling him to maintain significant control of the company’s stock.
Former WeWork CEO receives significant compensation from a Silicon Valley billionaire: Report
Following Neumann’s departure, WeWork’s new president Marcelo Claure defended the decision, stating, “We owe Adam a debt of gratitude for building this business,” and emphasized that the company now faces no risk of bankruptcy. Claure will leave SoftBank in 2022.
Subsequently, SoftBank demanded that Neumann return its offer, leading to a lawsuit filed by Neumann. The dispute was eventually resolved through a renegotiation of the deal to pave the way for WeWork’s public unveiling.
In the end, the company transitioned to being publicly traded through a special purpose acquisition company deal in 2021 but was never able to generate profits.
Nevertheless, WeWork’s current CEO David Tolley expressed optimism on Monday that the company’s bankruptcy will facilitate the necessary changes.
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Tolley stated, “Now is the time to move forward into the future by actively addressing our existing leases and significantly improving our financial standing. We have redefined a new way of working, and these measures will allow us to maintain our position as the global frontrunner in flexible workspace.”