Bankrupt co-working space provider WeWork said it did not owe rent to 160 landlords for the month of November, according to a court filing. The company said Wednesday in a bankruptcy filing that those landlords who disagree with the specified amount of rent owed between the bankruptcy filing date and the end of the first month of the bankruptcy “must first engage in a good faith attempt to resolving this disagreement with [WeWork] before they file their proof of claim”.
WeWork filed for bankruptcy on November 6 after the downturn in the office market. Unless the company has rejected the leases by that date, it owes its landlords rent for the period from November 6 through the end of that month, according to bankruptcy laws and case law.
The claim surprised the landlords named in the document, as well as the zero amount listed.
“We didn’t expect to see zero”, said Ivan Gold, an attorney representing several WeWork landlords, including those to whom WeWork has set “0 USD” as their rent amounts. “I’m confused by the position that WeWork is taking, and at this point I don’t understand the legal or factual basis for it”, said Ivan Gold. “I’m sure a lot of further discussion will be required”, added he.
A WeWork spokesman declined to comment on the filing on Friday.
In late January, lawyers representing the bankruptcy creditors’ committee said in a court filing that WeWork withheld about 33 million USD in January rent payments to certain landlords. Lawyers for WeWork said in a court hearing earlier this week that the company withheld rent payments for landlords who refused to come to the table for rent negotiations.
Attorneys for the landlords disputed the claim, saying those landlords negotiated with WeWork. By withholding rents, WeWork is trying to speed up negotiations with certain landlords, lawyers said.
Once valued at 47 billion USD, the flexible office space provider has been trying since September to lower the cost of its real estate portfolio by renegotiating its leases with about 500 landlords worldwide.
The bankruptcy code gives WeWork the right to reject unfavorable leases in the US and Canada. But the threat of rejection does not seem to be enough for many landlords to agree to contract changes, such as reducing rent payments, reducing the size of leased spaces or shortening the length of the lease.
WeWork said it has modified 38 leases so far, while rejecting roughly 90 contracts in the US and Canada as of January.
