9 ms·

WeWork Skips $95M in Interest Payments

53 points by LastNevadan 3y ago

ggm 3y ago
I dislike this "negotiate by brinkmanship" approach intensely. Musk did it to landlords, suppliers of goods and service, lawyers. It's not valid business practice. Wework should be put in the hands of an official receiver. The whole "stick it to the man" vibe of one class of capitalist being a parasite on another kind of capitalist, and in the end it's shareholders and tax payers who suffer.
- CoastalCoder 3y ago
  I have mixed feelings on this. On the one hand, it's still playing within the legal rules of the business system. And one might expect sophisticated lenders to account for this possibility in their contracts and financial terms. I.e., to price in this risk. On the other hand, it's at odds with my intuitive notion of honorable conduct. On a personal level, I see obligations to others as carrying moral weight.
  - lotsofpulp 3y ago
    Imagine everyone doing this, all the time. That is what it is like living in a low trust society, such as many developing countries. Simple transactions cost far more, take way more time. Lots of resources wasted in vetting, and lots of price premiums to account for inevitable losses due to corruption.
  - londons_explore 3y ago
    > account for this possibility in their contracts And it's easy to do... "If you are late paying the due amount, even by one day, then the amount payable increases by 25% immediately, followed by 5% more each day until paid". That way if anyone plays chicken with anyone else by paying late, at least when bankruptcy proceedings are begun the payable total will be far larger, and so a bigger piece of the pie will be theirs.
    - nikanj 3y ago
      You are unable to force them to pay $100 million but have cleverly written contract clauses that cause them to owe you $125 million now. Which they're also not paying.
- cyberlurker 3y ago
  Another individual was famous for this sort of tactic and caused a lot of damage to the local economy in Atlantic City.
  - deleted 3y ago
    [deleted]
- gadders 3y ago
  You see it a lot in cable TV. They will periodically (for example) pull all Disney channels until they can get an agreement: https://edition.cnn.com/2023/09/01/media/disney-spectrum-cable-carriage-deal/index.html https://edition.cnn.com/2023/09/01/media/disney-spectrum-cab...
  - lotsofpulp 3y ago
    This is not the same. ggm is referring to a buyer and seller agreeing to a trade, the seller providing the product or service, and then the buyer reneging on the payment in order to extract concessions because the legal and headache costs of pursuing full payment via courts would presumably not be worth it for the seller. This is trying to arbitrage the inefficiency of courts. Technically, everyone in society can do this, but it raises the costs of transacting considerably and reduces societal trust. A high trust society where you do not have to worry about dragging everyone to court or having to fund courts for many more cases will waste less resources on dispute resolution. In TV, the buyer (cable or satellite TV business) and the seller (content owner) never had an agreement after a certain date, so the channels disappearing is not a similar situation.
- oldtownroad 3y ago
  Everything in business is a negotiation: these loans will have been established with the same leverage-everything negotiation style. WeWork are announcing it because their position would be weakened if it was leaked by their lenders but this sort of behaviour happens every day in business — it’s just rarely announced. The lenders would engage in exactly the same behaviour it benefited their financial position, it’s a parasite eat parasite world. I certainly agree that not paying suppliers etc. is problematic behaviour but this isn’t an example of that.
- bananapub 3y ago
  this isn't even the first round. the founder of WeWork took bajillions of dollars from investors and did all sorts of related party shennanigans to take more, then took half a billion dollar payout just so he'd fuck off finally.
  - lotsofpulp 3y ago
    The investors of WeWork gave bajillions of dollars to the founders of WeWork.
- fidotron 3y ago
  Par for the course with NYC headquartered companies. I have encountered them not paying office rent or contractors if they think they can get away with it. The scary thing is they do get away with it. Everything is a negotiation, all the time. It is very tedious.
- benjaminwootton 3y ago
  I love the comment that the move is "intended to start negotiations with lenders." How very constructive of them!
  - CPLX 3y ago
    For the most part lenders can’t really negotiate until a payment is missed.
- pseg134 3y ago
  How for the tax payers suffer? But yeah let’s bring back debtor prisons. That was great for capital formation.
- kshahkshah 3y ago
  The risk of their default is supposed to be built into the price. On the other hand they suffer short term reputational damage which could prevent them from getting future loans, but they are in survival mode so that doesn't really matter right now. I guess it is unpopular to say but I like WeWork and I'm rooting for them. We were very very early users before even their NYC Flagship at 175 Varick. Those early days were really memorable. They provided something no one else did. I think the model makes sense over the long term with some austerity, so I'm rooting for them.
  - CPLX 3y ago
    Me too. It’s just a fantastic product. Spend 30 seconds interacting with the inept criminal organization that is Regus/Spaces and you’ll appreciate WeWork even more.
    - aenis 3y ago
      Can you elaborate? I rented a few rooms with Regus (in Europe), and it worked just fine.
      - CPLX 3y ago
        Their billing is horrible and intentionally confusing and exploitative and borderline criminal and it is deeply embedded in their culture. Context: https://www.google.com/search?rls=en&q=regus+billing+reddit&ie=UTF-8&oe=UTF-8 https://www.google.com/search?rls=en&q=regus+billing+reddit&...
  - afavour 3y ago
    I like WeWork but I’m not sure I’m rooting for them. They pioneered the model, they got in over their skis and expanded too fast and took their eye of the ball with a million distractions. They deserve failure. I believe the model does work and that some other company content to work on a smaller scale will find plenty of success with it. Here in NYC there are already a number of them.
    - 3y ago
- CharlieDigital 3y ago
  > I dislike this "negotiate by brinkmanship" approach intensely It's because you have ethics.
- pc_edwin 3y ago
  This is business at truest and most raw form. Its easily one of my favourite parts of capitalism where you get as close to nature as you can in a civilised world. WeWork is walking an extremely tight rope with a very narrow window of time and not a lot of options. Things could go in many directions (merger, acquisition, bankruptcy, extension) and this is the last time the current management/shareholders will have any kind of say/leverage in what happens. Do you just expect them to do nothing and wait for inevitable implosion and the subsequent wipe out of shareholders, mass layoffs and probably either the end of the brand or a restructured version that will be a shell of its former self. Btw speaking of Elon, he was in a very similar spot this time last year. Mass exodus advertisers dropping already bad financials of a cliff with looming interest payments. > and in the end it's shareholders and tax payers who suffer This makes it look like a good vs bad situation when in reality its an already bad situation where you multiple stakeholders fighting for who loses the least.
  - lotsofpulp 3y ago
    >This is business at truest and most raw form. Its easily one of my favourite parts of capitalism where you get as close to nature as you can in a civilised world. Considering it has a lot to do with how much money you have to throw at lawyers, and arbitrary things like how well staffed the courts are with judges, my characterization would be anything but “close to nature”.
    - pc_edwin 3y ago
      Not yet, this is the part where they are trying to avoid that like hell. That said, even when/if (lol) they get there its still part of the capitalism just like how hiring a good salesman or marketer is part of capitalism.
    - adhesive_wombat 3y ago
      Bigger, faster heavier animals with sharper teeth and better night vision eat you and you can't do much about it except hope that after you personally are gone that they predate the rest of your group so hard they go extinct before the rest of your group do. Sounds about right.
- londons_explore 3y ago
  > Wework should be put in the hands of an official receiver. Anyone with an outstanding debt can ask a bankruptcy court for this... The fact nobody has done so means nobody thinks it's worth it.
runarb 3y ago
https://archive.ph/F5aq5 https://archive.ph/F5aq5
Crosseye_Jack 3y ago
https://archive.ph/F5aq5 https://archive.ph/F5aq5
benjaminwootton 3y ago
I've used lots of the London WeWork sites since 2015, and carried on all through the depths of the pandemic and since. For the last few years, I've been scratching my head how they are even staying open. Almost all of the centrally located ones around the City have been like ghost towns. Sometimes it seems there are only 2-3 people in the whole building, especially Monday and Friday. In the last 3-4 months they are finally getting back to how they were. Struggling to get rooms, phone booths, hot desks etc and a bit of buzz is returning. I really think return to office is finally a thing after the summer. My experience with their sales teams has been abysmal. I must have contacted them 5 times asking about upgrades, and I've never once had anybody follow up properly - e.g. email trails go dead, no availability for viewings etc.
- the_mitsuhiko 3y ago
  > Almost all of the centrally located ones around the City have been like ghost towns. They also seem to have quite restrictive opening times at this point.
  - oldtownroad 3y ago
    Are you sure? They’ve always been 24 hours 365 days a year for building members, and typical office hours for day pass visitors (9-6 Monday to Friday) — that hasn’t changed (here in London at least). Edit: https://help.wework.com/s/article/en-us-articles-115003881666-What-are-your-building-hours-When-are-you-open https://help.wework.com/s/article/en-us-articles-11500388166...
    - the_mitsuhiko 3y ago
      I'm going by the all-access pass which is the main form of wework I'm familiar with. It used to be 24/7 and it no longer is.
      - nhourcard 3y ago
        our wework in waterloo is quite full, especially on tuesday/thursday. Astonishingly, there are still two baristas serving coffees from state of the art La Marzocco coffee machines. All this while the share price collapsed and the market cap is $150M.
rvz 3y ago
WeAreGoingBankrupt.
- user3939382 3y ago
  lmao
spandextwins 3y ago
Lots of Silicon Valley inflates their corporate value to get good stuff I’m told.
- deleted 3y ago
  [deleted]
Waterluvian 3y ago
Does this count as defaulting on debt? Will this pretty much crush their ability to secure preferred credit?
- londons_explore 3y ago
  Yes, unless they pay within 30 days.
gameshot911 3y ago
Can someone explain why any one given lender wouldn't just say "fuck you, pay me"? In the broad sense I understand - if paying would cause a going concern for the lendee, the le der would rather get something tether than nothing. But in this case, the article even said the wework has cash on hand and a credit line. Why wouldn't any one given lender try to cash out in full and run for the doors, and leave all the other lenders who renegotiated holding the bag? Simply get a legal order forcing wework to pay in full while they still have the ability to (even if it meant paying YOU in full would make it so they wouldn't be able to pay OTHERS later).
- 4death4 3y ago
  Where does the lender get this magic “get paid in full” option? Obviously if the lender has that option, they would take it. But they don’t. Even if they got a court order demanding wework pay out, that claim would get lumped in with all the other claims. You can’t just magically skip the line.
  - gameshot911 3y ago
    Only if they file for bankruptcy. I'm saying get paid in full via court order before they file for larger bankruptcy. If wework owes you $100M that you demand repayment on, and they owe $1B in total, they may not want to declare full bankruptcy just for your 10% of the total debt. In which case you can get a court order to be paid in full, since they was the terms of the original debt contract.
    - 4death4 3y ago
      If the debt is structured in such a way that the lender can demand payment in full at any time, then sure, that might work. But the vast majority of debt is not structured like that.
      - gameshot911 3y ago
        I meant more so get paid in full whatever you're owed at that point in time. But you're right, sure you may get full payment on the 1/20th of a debt you're owed today, but if that puts the rest of the repayments at risk I can see why you'd want to negotiate.
game_the0ry 3y ago
WeWork's business model - arbitrage between long term liabilities (lease a lot of space from a building) and short term assets (sub lease portions of that space with short terms). That model works poorly in good times, and never works in bad times.
thecal 3y ago
I am reminded of this quote: "If you owe the bank $100, that's your problem. If you owe the bank $100 million, that's the bank's problem." -J. Paul Getty

53 points by LastNevadan 3y ago

ggm 3y ago

I dislike this "negotiate by brinkmanship" approach intensely. Musk did it to landlords, suppliers of goods and service, lawyers. It's not valid business practice. Wework should be put in the hands of an official receiver. The whole "stick it to the man" vibe of one class of capitalist being a parasite on another kind of capitalist, and in the end it's shareholders and tax payers who suffer.

CoastalCoder 3y ago
I have mixed feelings on this. On the one hand, it's still playing within the legal rules of the business system. And one might expect sophisticated lenders to account for this possibility in their contracts and financial terms. I.e., to price in this risk. On the other hand, it's at odds with my intuitive notion of honorable conduct. On a personal level, I see obligations to others as carrying moral weight.
- lotsofpulp 3y ago
  Imagine everyone doing this, all the time. That is what it is like living in a low trust society, such as many developing countries. Simple transactions cost far more, take way more time. Lots of resources wasted in vetting, and lots of price premiums to account for inevitable losses due to corruption.
- londons_explore 3y ago
  > account for this possibility in their contracts And it's easy to do... "If you are late paying the due amount, even by one day, then the amount payable increases by 25% immediately, followed by 5% more each day until paid". That way if anyone plays chicken with anyone else by paying late, at least when bankruptcy proceedings are begun the payable total will be far larger, and so a bigger piece of the pie will be theirs.
  - nikanj 3y ago
    You are unable to force them to pay $100 million but have cleverly written contract clauses that cause them to owe you $125 million now. Which they're also not paying.
cyberlurker 3y ago
Another individual was famous for this sort of tactic and caused a lot of damage to the local economy in Atlantic City.
- deleted 3y ago
  [deleted]
gadders 3y ago
You see it a lot in cable TV. They will periodically (for example) pull all Disney channels until they can get an agreement: https://edition.cnn.com/2023/09/01/media/disney-spectrum-cable-carriage-deal/index.html https://edition.cnn.com/2023/09/01/media/disney-spectrum-cab...
- lotsofpulp 3y ago
  This is not the same. ggm is referring to a buyer and seller agreeing to a trade, the seller providing the product or service, and then the buyer reneging on the payment in order to extract concessions because the legal and headache costs of pursuing full payment via courts would presumably not be worth it for the seller. This is trying to arbitrage the inefficiency of courts. Technically, everyone in society can do this, but it raises the costs of transacting considerably and reduces societal trust. A high trust society where you do not have to worry about dragging everyone to court or having to fund courts for many more cases will waste less resources on dispute resolution. In TV, the buyer (cable or satellite TV business) and the seller (content owner) never had an agreement after a certain date, so the channels disappearing is not a similar situation.
oldtownroad 3y ago
Everything in business is a negotiation: these loans will have been established with the same leverage-everything negotiation style. WeWork are announcing it because their position would be weakened if it was leaked by their lenders but this sort of behaviour happens every day in business — it’s just rarely announced. The lenders would engage in exactly the same behaviour it benefited their financial position, it’s a parasite eat parasite world. I certainly agree that not paying suppliers etc. is problematic behaviour but this isn’t an example of that.
bananapub 3y ago
this isn't even the first round. the founder of WeWork took bajillions of dollars from investors and did all sorts of related party shennanigans to take more, then took half a billion dollar payout just so he'd fuck off finally.
- lotsofpulp 3y ago
  The investors of WeWork gave bajillions of dollars to the founders of WeWork.
fidotron 3y ago
Par for the course with NYC headquartered companies. I have encountered them not paying office rent or contractors if they think they can get away with it. The scary thing is they do get away with it. Everything is a negotiation, all the time. It is very tedious.
benjaminwootton 3y ago
I love the comment that the move is "intended to start negotiations with lenders." How very constructive of them!
- CPLX 3y ago
  For the most part lenders can’t really negotiate until a payment is missed.
pseg134 3y ago
How for the tax payers suffer? But yeah let’s bring back debtor prisons. That was great for capital formation.
kshahkshah 3y ago
The risk of their default is supposed to be built into the price. On the other hand they suffer short term reputational damage which could prevent them from getting future loans, but they are in survival mode so that doesn't really matter right now. I guess it is unpopular to say but I like WeWork and I'm rooting for them. We were very very early users before even their NYC Flagship at 175 Varick. Those early days were really memorable. They provided something no one else did. I think the model makes sense over the long term with some austerity, so I'm rooting for them.
- CPLX 3y ago
  Me too. It’s just a fantastic product. Spend 30 seconds interacting with the inept criminal organization that is Regus/Spaces and you’ll appreciate WeWork even more.
  - aenis 3y ago
    Can you elaborate? I rented a few rooms with Regus (in Europe), and it worked just fine.
    - CPLX 3y ago
      Their billing is horrible and intentionally confusing and exploitative and borderline criminal and it is deeply embedded in their culture. Context: https://www.google.com/search?rls=en&q=regus+billing+reddit&ie=UTF-8&oe=UTF-8 https://www.google.com/search?rls=en&q=regus+billing+reddit&...
- afavour 3y ago
  I like WeWork but I’m not sure I’m rooting for them. They pioneered the model, they got in over their skis and expanded too fast and took their eye of the ball with a million distractions. They deserve failure. I believe the model does work and that some other company content to work on a smaller scale will find plenty of success with it. Here in NYC there are already a number of them.
  - 3y ago
CharlieDigital 3y ago
> I dislike this "negotiate by brinkmanship" approach intensely It's because you have ethics.
pc_edwin 3y ago
This is business at truest and most raw form. Its easily one of my favourite parts of capitalism where you get as close to nature as you can in a civilised world. WeWork is walking an extremely tight rope with a very narrow window of time and not a lot of options. Things could go in many directions (merger, acquisition, bankruptcy, extension) and this is the last time the current management/shareholders will have any kind of say/leverage in what happens. Do you just expect them to do nothing and wait for inevitable implosion and the subsequent wipe out of shareholders, mass layoffs and probably either the end of the brand or a restructured version that will be a shell of its former self. Btw speaking of Elon, he was in a very similar spot this time last year. Mass exodus advertisers dropping already bad financials of a cliff with looming interest payments. > and in the end it's shareholders and tax payers who suffer This makes it look like a good vs bad situation when in reality its an already bad situation where you multiple stakeholders fighting for who loses the least.
- lotsofpulp 3y ago
  >This is business at truest and most raw form. Its easily one of my favourite parts of capitalism where you get as close to nature as you can in a civilised world. Considering it has a lot to do with how much money you have to throw at lawyers, and arbitrary things like how well staffed the courts are with judges, my characterization would be anything but “close to nature”.
  - pc_edwin 3y ago
    Not yet, this is the part where they are trying to avoid that like hell. That said, even when/if (lol) they get there its still part of the capitalism just like how hiring a good salesman or marketer is part of capitalism.
  - adhesive_wombat 3y ago
    Bigger, faster heavier animals with sharper teeth and better night vision eat you and you can't do much about it except hope that after you personally are gone that they predate the rest of your group so hard they go extinct before the rest of your group do. Sounds about right.
londons_explore 3y ago
> Wework should be put in the hands of an official receiver. Anyone with an outstanding debt can ask a bankruptcy court for this... The fact nobody has done so means nobody thinks it's worth it.

runarb 3y ago

https://archive.ph/F5aq5 https://archive.ph/F5aq5

Crosseye_Jack 3y ago

https://archive.ph/F5aq5 https://archive.ph/F5aq5

benjaminwootton 3y ago

I've used lots of the London WeWork sites since 2015, and carried on all through the depths of the pandemic and since. For the last few years, I've been scratching my head how they are even staying open. Almost all of the centrally located ones around the City have been like ghost towns. Sometimes it seems there are only 2-3 people in the whole building, especially Monday and Friday. In the last 3-4 months they are finally getting back to how they were. Struggling to get rooms, phone booths, hot desks etc and a bit of buzz is returning. I really think return to office is finally a thing after the summer. My experience with their sales teams has been abysmal. I must have contacted them 5 times asking about upgrades, and I've never once had anybody follow up properly - e.g. email trails go dead, no availability for viewings etc.

the_mitsuhiko 3y ago
> Almost all of the centrally located ones around the City have been like ghost towns. They also seem to have quite restrictive opening times at this point.
- oldtownroad 3y ago
  Are you sure? They’ve always been 24 hours 365 days a year for building members, and typical office hours for day pass visitors (9-6 Monday to Friday) — that hasn’t changed (here in London at least). Edit: https://help.wework.com/s/article/en-us-articles-115003881666-What-are-your-building-hours-When-are-you-open https://help.wework.com/s/article/en-us-articles-11500388166...
  - the_mitsuhiko 3y ago
    I'm going by the all-access pass which is the main form of wework I'm familiar with. It used to be 24/7 and it no longer is.
    - nhourcard 3y ago
      our wework in waterloo is quite full, especially on tuesday/thursday. Astonishingly, there are still two baristas serving coffees from state of the art La Marzocco coffee machines. All this while the share price collapsed and the market cap is $150M.

rvz 3y ago

WeAreGoingBankrupt.

user3939382 3y ago
lmao

spandextwins 3y ago

Lots of Silicon Valley inflates their corporate value to get good stuff I’m told.

deleted 3y ago
[deleted]

Waterluvian 3y ago

Does this count as defaulting on debt? Will this pretty much crush their ability to secure preferred credit?

londons_explore 3y ago
Yes, unless they pay within 30 days.

gameshot911 3y ago

Can someone explain why any one given lender wouldn't just say "fuck you, pay me"? In the broad sense I understand - if paying would cause a going concern for the lendee, the le der would rather get something tether than nothing. But in this case, the article even said the wework has cash on hand and a credit line. Why wouldn't any one given lender try to cash out in full and run for the doors, and leave all the other lenders who renegotiated holding the bag? Simply get a legal order forcing wework to pay in full while they still have the ability to (even if it meant paying YOU in full would make it so they wouldn't be able to pay OTHERS later).

4death4 3y ago
Where does the lender get this magic “get paid in full” option? Obviously if the lender has that option, they would take it. But they don’t. Even if they got a court order demanding wework pay out, that claim would get lumped in with all the other claims. You can’t just magically skip the line.
- gameshot911 3y ago
  Only if they file for bankruptcy. I'm saying get paid in full via court order before they file for larger bankruptcy. If wework owes you $100M that you demand repayment on, and they owe $1B in total, they may not want to declare full bankruptcy just for your 10% of the total debt. In which case you can get a court order to be paid in full, since they was the terms of the original debt contract.
  - 4death4 3y ago
    If the debt is structured in such a way that the lender can demand payment in full at any time, then sure, that might work. But the vast majority of debt is not structured like that.
    - gameshot911 3y ago
      I meant more so get paid in full whatever you're owed at that point in time. But you're right, sure you may get full payment on the 1/20th of a debt you're owed today, but if that puts the rest of the repayments at risk I can see why you'd want to negotiate.

game_the0ry 3y ago

WeWork's business model - arbitrage between long term liabilities (lease a lot of space from a building) and short term assets (sub lease portions of that space with short terms). That model works poorly in good times, and never works in bad times.

thecal 3y ago

I am reminded of this quote: "If you owe the bank $100, that's your problem. If you owe the bank $100 million, that's the bank's problem." -J. Paul Getty