WeWork disclosure statement conditionally OK’d following new deal

By Sarah Lizee

Olympia, Wash., April 29 – WeWork Inc. received conditional approval of the disclosure statement for its third-amended Chapter 11 plan of reorganization following new agreements reached with SoftBank, Yardi-owned Cupar Grimmond, LLC, an informal noteholder group and the official committee of unsecured creditors, according to documents filed Monday with the U.S. Bankruptcy Court for the District of New Jersey.

The deal includes a settlement that provides a recovery to the holders of third-lien note claims, general unsecured claims and unsecured note claims, WeWork said.

According to the amended disclosure statement, the company has lined up $450 million in debtor-in-possession new-money interim financing and DIP new-money exit financing with its senior lenders as part of the deal.

The DIP financing is comprised of the following:

• Up to $50 million committed during the Chapter 11 cases via the DIP new-money interim facility, with up to $12.5 million to be provided by bondholders and up to $37.5 million to be provided by Cupar; and

• Up to $400 million committed upon the effective date, with up to $100 million to be provided by bondholders up to $300 million to be provided by Cupar.

Each DIP new-money interim facility claim will be paid in full in cash on the effective date.

Each DIP new-money exit facility claim will receive its pro rata share of the new money equity distribution, which constitutes 80% of the new interests, plus premiums and subject to adjustments and dilution.

The financing is expected to provide sufficient liquidity for the debtors to pay all allowed administrative claims, including stub rent claims and any deferred post-petition rent obligations in full in cash, and ensure that the company is adequately capitalized upon emergence.

The debtors and the required consenting stakeholders, including SoftBank, have also agreed to revised treatment of the DIP letter-of-credit facility and the DIP term loan C facility, as well as revised terms for the exit LoC facility.

Holders of $250 million of allowed drawn DIP term loan C claims will receive their pro rata share of an equity distribution. This is expected to lead to a recovery of 7.17%.

Holders of $421 million of allowed undrawn DIP term loan C claims are expected to receive a 100% recovery. Holders will receive, in the case of an excess DIP term loan C claim, payment in full in cash in an amount equal to the excess DIP claim from amounts remaining from the proceeds of the DIP term loan C facility, which will be funded solely from amounts constituting DIP LoC loan collateral after the funding of the SoftBank parties’ obligations to support the exit LoC facility; and, in the case of a rolled undrawn DIP term loan C claim, will be converted into obligations under the exit LoC facility on a dollar-for-dollar basis.

Holders of $949 million of prepetition LoC facility claims are expected to receive a 3.5% recovery via pro rata equity distribution.

Holders of $1.16 billion of first-lien note claims are expected to receive a 4.81% recovery via pro rata equity distribution.

Holders of $933 million of second-lien note claims are expected to receive a 3.07% recovery via pro rata equity distribution.

Holders of $313 million third-lien note claims will receive their share of settlement proceeds.

Holders of $180 million unsecured note claims that are not participating in the settlement will receive their pro rata share of an unsecured note pool, which will include cash fixed at an amount that results in non-participants receiving the same percentage recovery from the pool as general unsecured creditors receive under the settlement.

Holders of general unsecured claims will receive their share of the settlement proceeds. The amount of claims in this class is expected to be $520 million to $590 million.

Each holder of an allowed other secured claim will receive either payment in full in cash, the collateral securing its claim, reinstatement of its claim or other treatment leaving the claim unimpaired.

Each holder of an other priority claim will receive payment in full in cash.

Parent interests will be canceled.

A combined hearing on final approval of the disclosure statement and confirmation of the plan is scheduled for May 30.

WeWork is a New York-based provider of shared workspaces and related business services. The company filed bankruptcy on Nov. 6, 2023 under Chapter 11 case number 23-19865.

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