Proactive Investors - WeWork Inc (NYSE:WE) has ended speculation that its controversial founder Adam Neumann may be returning to pull it from bankruptcy after it confirmed senior creditors would be taking control instead.
Lenders to the shared office space provider have agreed to pump a fresh US$450 million into the company in return for ownership.
On Monday, the plan was approved by a Federal bankruptcy court judge, with creditors scheduled to vote on the deal at the end of the month.
Yardi Systems, the real estate technology provider that worked with and funded WeWork, will inject another US$337 million to receive around 60% of the reorganised business.
A range of hedge funds will stump up the remaining US$113 million in return for a 20% stake in the new WeWork.
Meanwhile, lenders which provided around US$4 billion in debt to WeWork pre-bankruptcy, which includes SoftBank, will receive the final 20% of the company.
Should the deal be approved, WeWork will emerge from administration with no debt and an estimated value of around US$750 million.
It’s a long way from the US$47 billion valuation WeWork received back when it was private and will see former creditors recover around 5 cents on every dollar lent.
Adam Neumann, who was pushed out as boss of the company after reports exposed his party-hard and conflicting attitude, had been attempting to purchase WeWork since back in December.
However, much of Neumann's hopes were dashed when WeWork lawyers told the court that both secured and unsecured creditors were in support of the restructuring.