Adam Neumann, WeWork’s co-founder has filed a lawsuit against SoftBank Group Corp and against its Vision Fund for terminating a $3 billion tender offer to the office-sharing startup’s shareholders.
In October, the tender was part of a $9.6 billion financial rescue package that SoftBank had agreed to, following which WeWork gave it control of the company. Since then, WeWork’s occupancy rates have plummeted amid the COVID-19 pandemic.
In April, SoftBank said it would not press ahead with the tender since several pre-conditions had not been met, which frustrated WeWork’s minority shareholders, who were expecting a payout.
The investors included Adam Neumann.
“The abuses committed by (SoftBank) and SBVF (SoftBank Vision Fund) are so brazen that they have prompted legal action by a special committee of WeWork’s board,” said the lawsuit filed in a Delaware Court.
An independent special committee, comprising of Bruce Dunlevie, a general partner at WeWork shareholder Benchmark Capital, and Lew Frankfort, former CEO of Coach, had also filed a lawsuit, calling SoftBank’s decision to terminate the tender offer wrongful.
SoftBank’s lawyers had questioned the special committee’s right to represent minority shareholders, an assertion the committee rejected last month.
“In real time, SBG (SoftBank) and SBVF (SoftBank Vision Fund) are abusing their control of WeWork in an effort to stop the special committee’s meritorious lawsuit from being heard,” said the lawsuit.
SoftBank’s Chief Legal Officer Rob Townsend called Neumann’s claims “meritless”.
Under the terms of the agreement SoftBank had “no obligation” to complete the tender offer in which Neumann – the biggest beneficiary – sought to sell nearly $1 billion in stock.