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.
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.
Discussing 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.”