NEW YORK (Reuters) – WeWork officials, including co-founder and former Chief Executive Adam Neumann, are being sued by minority shareholders to recoup losses as the shared workspace provider pulled its initial public offering and saw its value plunge more than 87%.
FILE PHOTO: The WeWork logo is displayed outside of a co-working space in New York City, New York U.S., January 8, 2019. REUTERS/Brendan McDermid/File Photo
In a proposed class action filed this week in San Francisco Superior Court, former WeWork employee Natalie Sojka accused the company’s board of directors of breaching its fiduciary duties to minority shareholders like her.
The San Francisco resident faulted the board for letting Japan’s SoftBank Group (9984.T) rescue WeWork by boosting its stake to a potential 80% from 29% at a “fire-sale” price, and granting Neumann a $1.7 billion exit package.
Softbank and its chairman, Masayoshi Son, are among the 10 named defendants in the Nov. 4 complaint.
“WeWork believes this lawsuit is meritless,” a spokeswoman said on Friday. Softbank and outside representatives did not immediately respond to requests for comment. Sojka’s lawyer did not immediately respond to a similar request.
The lawsuit is a new hurdle for WeWork, whose New York-based parent, the We Company, shelved its IPO on Sept. 30 after investors grew wary of its losses, its business model and its corporate governance. Neumann had resigned the previous week.
Estimates of WeWork’s valuation have sunk to as little as $5.9 billion, based on the value of Softbank’s proposed $9.5 billion rescue, from $47 billion in August.
Major job cuts are expected, and Neumann’s former chief