New York – Two independent WeWork directors failed to fast-track their lawsuit over SoftBank Group Corp.’s decision to scrap a $3 billion stock purchase that was part of a rescue package the struggling office space provider secured last October.
Delaware Chancery Judge Andre Bouchard said the WeWork board members didn’t show they’d suffer “irreparable harm” by having to wait longer for a trial, which Bouchard set for January. The directors had asked for the trial to start in August, but the judge said that was unworkable because of court disruptions caused by the COVID-19 pandemic.
“We are gratified that the court recognized the lack of any ‘imminent, irreparable harm’ claimed by the special committee and has given the parties the time required for a fair trial,” said Rob Townsend, SoftBank’s chief legal officer.
“We remain fully committed to defending the best interests of WeWork’s minority stockholders,” the special committee of WeWork directors said in statement.
A spokeswoman for WeWork declined to comment.
SoftBank agreed to buy shares from ex-CEO Adam Neumann, Benchmark Capital and other investors as part of a $9.6 billion bailout last year. In mid-March, the conglomerate notified stockholders that some of the deal conditions hadn’t been met, and then scrapped the offer.
Since then, the office space-sharing start-up’s occupancy rates have plummeted, as customers in big cities stay at home to prevent the spread of the virus.
SoftBank has said it would not press ahead with the tender offer because several preconditions had not been met, frustrating WeWork’s minority shareholders, who were expecting a payout.
While SoftBank cited the business impact of the COVID-19 pandemic as one of the reasons it would not complete the tender offer, it also pointed to U.S. criminal and civil investigations into WeWork and the failure to restructure a joint venture in China as grounds for abandoning it.
The independent WeWork directors accuse SoftBank of “buyer’s remorse” and reneging on promises to use its “best efforts” to finalize the stock-purchase agreement.
While SoftBank was able to immediately load the board with its nominees under the agreement, WeWork hasn’t gotten access to the $1.1 billion in financing that was promised, David Berger, an attorney for the WeWork directors, told the judge.
“The company needs access to the financing” on an expedited basis and the only way to do that is to force the closing of the deal, Berger said.