Adam Neumann, WeWork's Former Chief, Sues SoftBank (nytimes.com) 40
Adam Neumann, a co-founder of WeWork, sued SoftBank on Monday, accusing it of breaching a contract by withdrawing an offer to buy up to $3 billion in WeWork stock from Mr. Neumann and other shareholders. From a report: SoftBank, a Japanese conglomerate that has invested in many fast-growing but unprofitable start-ups, included the stock offer in a bailout that saved WeWork from financial collapse last year. Mr. Neumann's lawsuit, filed in the Delaware Court of Chancery, contends that SoftBank and one of its investment funds "reneged on their promise to pay for the benefits they had already received" when they withdrew the offer last month. SoftBank, which gained effective control of WeWork in the rescue, previously said it walked away from the stock-purchase offer because certain provisions of the deal had not been met. But Mr. Neumann's lawsuit asserts that SoftBank "was secretly taking actions to undermine" the deal. Robert Townsend, SoftBank's chief legal officer, said in a statement that the company "will vigorously defend itself against these meritless claims."
SoftBank invested billions of dollars in WeWork when Mr. Neumann, a charismatic entrepreneur who won the backing of prominent investors and banks, was its chief executive. Mr. Neumann, facing criticism of his leadership, stepped down as chief executive last year as WeWork unsuccessfully tried to sell stock in an initial public offering. Under the takeover agreement, Mr. Neumann stood to receive cash payments totaling $185 million and would have sold nearly $1 billion of his WeWork shares to SoftBank. SoftBank also gave him a $425 million loan to repay credit lines with banks that had been secured by WeWork stock.
SoftBank invested billions of dollars in WeWork when Mr. Neumann, a charismatic entrepreneur who won the backing of prominent investors and banks, was its chief executive. Mr. Neumann, facing criticism of his leadership, stepped down as chief executive last year as WeWork unsuccessfully tried to sell stock in an initial public offering. Under the takeover agreement, Mr. Neumann stood to receive cash payments totaling $185 million and would have sold nearly $1 billion of his WeWork shares to SoftBank. SoftBank also gave him a $425 million loan to repay credit lines with banks that had been secured by WeWork stock.
Let's see that contract... (Score:5, Insightful)
We're missing something here, the contract. SoftBank is claiming there's terms in the contact that allow them to refuse the stock purchase, and the former CEO thinks he's got a deal that forces up the shares he'd like to see go up.
Without the exact language of the contract, there's not much to discuss. Let the court sort this one out.
Re: (Score:2)
Re: (Score:2)
Of course the court gets to sort it out. Slashdot gets to make some popcorn and watch the drama. That includes a bunch of people commenting on WeWork as if their own money was somehow involved.
Re: (Score:2)
Re: (Score:2)
It should also be noted that unless he wins, he is effectively bankrupt, so its not his $100k he is spending on this lawsuit;
This is the operative component to the calculation. The lawsuit really represent a flyer - that is his real stake is a very small.
Otherwise imagine you are in the Casio and you have your last $10 in your pocket. There is a game with a $10 buy in and an 11% chance of paying out $100. You have not eaten today. - This is a bed bet - going to the McDonalds accross the street is a the right call.
Now suppose you have last $10,000 dollars in your pocket - than yes certainly buying 1000 spins is a good idea you
Re: (Score:2)
Re: (Score:2)
The failure to obtain the necessary antitrust approvals by April 1, 2020;
The failure to sign and close the roll up of the China joint venture by April 1, 2020;
The failure to close the roll up of the Asia (ex-China and ex-Japan) joint venture by April 1, 2020;
The existence of multiple, new, and significant pending criminal and civil investigations that have begun since the MTA was signed in October 2019, in which authorities have requested information regarding, among other things, WeWork’s financing activities, communications with investors, business dealings with Adam Neumann, operations, and financial condition; and
The existence of multiple new actions by governments around the world related to COVID-19, imposing restrictions against WeWork and its operations.
This is what I think went down:
1) SoftBank wanted to get rid of the CEO, but he had more than 50% of the voting rights.
2) They made a deal, where he would step down as CEO and from the board, but would be given $1billion.
3) SoftBank was careful to write the fine print in a way that would be impossible
It raises the question (Score:2)
What does the 'E' in Adam E. Neuman stand for?
Re: (Score:3)
Extortion.
Re: (Score:2)
Enigma
Re: (Score:3)
Re: (Score:2)
Benefits??? (Score:3)
pay for the benefits they had already received
Benefits? Money-losing properties with long-term leases, an understaffed and unqualified management staff in chaos, customers who were abandoning WeWork as fast as they could get out of their leases, and a bunch of useless odds and ends like MeetUp? Those benefits? SoftBank should buy everyone's stock **except** for Neumann's just to rub it in.
In other news (Score:4, Funny)
Ponzi sues Federal Reserve and UPS for destroying his business
No winners here (Score:4, Insightful)
Oh wait, yes, the lawyers win.
Re: (Score:2)
The lawyers always win. That's because they get to write the laws.
SoftBank is taking the shotgun approach (Score:2)
Re: (Score:1)
SoftBank was stupid to put so much money into an obvious dog.
In hindsight that's true but think about it if things had gone down ever so slightly differently. Suppose WeWork's IPO had gone through as planned. SoftBank would've made billions on the deal, as would Neumann and his nepotistic cabal. They all would've cashed out and gone off to their yachts, helicopters, and megamansions as quickly as possible. THEN WeWork would've crashed and burned as it is currently doing as the business model is almost certainly impossible, leaving the rank and file employees and
Don't throw stones in glass WeWork buildings (Score:3)
Re: (Score:2)
My question is in the middle of a fucking economy-destroying pandemic, why *aren't* you walking away happy with whatever wealth you managed to get?
There are non-zero odds that none of this paper capital he's chasing or hoping to gain more will even exist in 6-12 months, or if it does Trump, Biden, Congress or our new Military Junta is going to be strip-mining all accumulated wealth to keep the fucking lights on.
This guy could be relaxing in the shade of some reasonable compound someplace with enough assets
Re: Don't throw stones in glass WeWork buildings (Score:2)
Re: (Score:2)
This guy could be relaxing in the shade of some reasonable compound someplace with enough assets to get him through to the other side. Why he's not is a mystery.
It's not a mystery exactly, it's just personality. Relative comfort isn't an issue for him. People like Neumann and Musk etc live for this kind of risk and all the types of rewards it can bring. Even the average Joe doesn't like to retire too soon!
Comment removed (Score:5, Interesting)
Re: (Score:2)
It should also be noted that he has $400M+ in personal debt secured by his we-work stock, but they will still be able to force the sale of all his assets if he is in default.
If that is true and he really did organize his personal finances like that, then he has horribly mismanaged everything.
Re: (Score:2)
Charismatic entrepreneur (Score:1)
He wants to become prime minister of Israel.
He talked about changing the laws so people not born in the U.S. could run for president.
He has considered running for “president of the world.”
He wants to become the world’s first trillionaire.
He is trying to live forever.
He smuggled pot onto a Gulfstream G650 private jet in a cereal box to smoke with his buddies
He told employees that one day the company could end world hunger.
He banned meat at his company, later clarif
Re: (Score:3)
He smuggled pot onto a Gulfstream G650
What an idiot. Everyone knows that private jets are for smuggling cocaine, a simple visit to any airport in Florida should demonstrate that.
wow (Score:2)
Good lord, the dude had a completely unsuccessful business plan and created a company that is tanking (and was tanking well before coronavirus), and still made hundreds of millions of dollars. What more does he want? Just take your money and scuttle off to obscurity and enjoy it!
Re: (Score:2)
When you've got hundreds of millions and you stand to gain billions from a little courtroom drama, it's worth it. You just hire some lawyers and tell them to go to it. Who knows, you might win something!
Re: (Score:2)
If nothing else they might pay you to go away.
Re: (Score:1)
This is the most likely scenario. Even if SoftBank has some ironclad wording in the contract allowing them to back out of the deal, courtroom wrangling could take years. Neumann is hoping for either an outright win (unlikely) or a deal where he gets a good chunk of those billions in return for going away.
And, as has been pointed out in other posts, if Neumann doesn't get anything out of SoftBank, he's effectively bankrupt to the tune of more than $400 million. For a guy who fancied living forever and bec
Re: (Score:2)
Well, let's see if the lawsuit actually gets litigated and Softbank's lawyers dig into Neumann more. There are a lot of people who think he crossed the line into criminal fraud, and it would be hilarious if something comes up in the civil case that gets forwarded to prosecutors.
Neumann has Nothing to Lose (Score:2)
Wah! (Score:2)
Wah, I didn't get my golden parachute, wah...
Wah, my scam was figured out before I could fleece my target, wah...
Sorry, tool, you'll have to keep working.
Re: (Score:2)
Re: (Score:1)
More like, he got scammed out of his company because he didn't read the fine print.
Given that he was more than willing to scam potential investors to the tune of around $47 billion in IPO money, I'd say that's fair.
Neumann is a case study in how investing has turned into a charisma contest instead of having anything to do with solid business principles. WeWork gained investors because Neumann was touted as "the next Steve Jobs" and buoyed by a sheen of authenticity from SoftBank. WeWork was notable for being notable, much like Paris Hilton was famous for being famous. Neither of these
Re: (Score:2)
Neither of these entities had any real value in and of themselves.
It seems like they actually have a clear path to profitability, it's just not the kind of explosive profit that is going to cover that many billions of dollars.
He's actually lucky he was in real estate and not biotech, otherwise he'd be Elizabeth Holmes.
We Crashed (Score:2)