WeWork Says 160 Landlords Get Zero in November Rent

Bankrupt coworking-space provider WeWork said it owes 160 landlords no rents for the month of November, according to a court filing.

The company said in a Wednesday bankruptcy court filing that those landlords who disagree with the listed amount of the so-called stub rent “must first engage in a good-faith attempt to resolve such disagreement with [WeWork] before filing their proof of claim.”

WeWork filed for bankruptcy on Nov. 6 after struggling with a downturn in the office market. Unless the company rejected the leases as of that date, it owes its landlords the stub rent from the petition date to the end of November, according to bankruptcy code and case law in the Third Circuit Court of Appeals. That circuit covers the U.S. Bankruptcy Court of New Jersey that handles WeWork’s bankruptcy case.

The filing came as a surprise for those landlords listed in the document along with the amount zero.

“We did not see zeros coming,” said Ivan Gold, a lawyer representing several WeWork landlords, including the ones that WeWork assigned “$0” as their stub rent amounts.

“I am confused by the position WeWork is taking and at this point don’t understand the legal or factual basis for it,” Gold told The Wall Street Journal on Thursday. “I am sure a lot of further discussions are going to be necessary.”

A spokesperson for WeWork declined to comment on the filing Friday.

In late January, lawyers representing the creditor committee in bankruptcy said in a court filing WeWork withheld about $33 million in January rent payments for certain landlords.

WeWork lawyers said at a court hearing earlier this week that the company held rent payments for landlords who weren’t willing to come to the table to negotiate leases.

Landlord lawyers disputed the assertion, saying these landlords have been negotiating with WeWork. By withholding the rent, WeWork was trying to strong-arm negotiations with certain landlords, the lawyers said.

Once valued at $47 billion, the flex-office provider has been on a mission since September to reduce the cost of its real-estate portfolio through renegotiating its leases with some 500 landlords globally.

Bankruptcy code empowers WeWork to reject unfavorable leases in the U.S. and Canada. But the threat of lease rejections doesn’t seem to be enough for many landlords to agree to lease amendments such as lowering rent payments, reducing the size of leased spaces or shortening the lease duration.

WeWork said it has so far amended 38 leases, while rejecting roughly 90 leases and contracts in the U.S. and Canada as of January.

Write to Akiko Matsuda at [email protected]