This dispute between WeWork and Softbank was going on for a while, but things have taken a much dangerous turn as WeWork filed a lawsuit against Softbank, which was currently its largest shareholder.
Reason behind the lawsuit
We company, the current owner of WeWork, has sued Softbank as it decided to challenge and terminate the current $3 Billion offer made to this real estate startup. Hence, this lawsuit was filed on the grounds of Softbank, not accepting and obliging to its contracts.
Softbank had agreed to buy a significant amount of shares of WeWork, and the prices of each stock were satisfactory to both sides. This contract drafted last year as Softbank officially announced that they bought the shares. The money would have reached the former employees, current minority stockholders, the CEO, and the Co-founder Adam Neumann. However, according to Softbank, it had terminated this tender offer for additional shares, mentioning its failure to start a joint venture in China because of the spread of COVID-19.
A bad phase for WeWork
Currently, WeWork is going through a bad phase because of the challenges it is facing in the internal business and even because of the external environment due to the global pandemic. This company faced many difficulties due to the virus as its occupancy rates plummeted down from the past two months as its primary customers forced to take action and vacate. From being recognized as one of the most successful startups to having trouble raising funds, this company was struck.
Before the latter had filed a lawsuit, Softbank had been its primary investor and significant shareholder as it pumped in almost $10 Billion towards WeWork. In October last year, WeWork had tried its best by forming a two-member committee to negotiate a financial lifeline from Softbank and even JPMorgan Chase and co (1).