(Reuters) – A special committee of WeWork board members filed a motion in Delaware on Monday to prevent it from being disbanded, as it pursues legal action against majority owner SoftBank Group Corp (9984.T) over an abandoned $3 billion tender offer for the office space-sharing start-up.
FILE PHOTO: A WeWork logo is seen at a WeWork office in San Francisco, California, U.S. September 30, 2019. REUTERS/Kate Munsch
It is the latest salvo in a heated legal dispute between the two sides. WeWork’s special committee, which represents minority shareholders in the company including its co-founder Adam Neumann, is contesting SoftBank’s decision to walk away from the tender offer agreed last year.
In the motion, WeWork’s special committee, filed a “status quo order” which would preserve the committee’s authority pending the outcome of the legal case between WeWork and SoftBank. A judge in Delaware court last month set the trial date for the case for early January.
According to the special committee’s motion, the board of the We Company, WeWork’s parent, held a meeting on April 29 at which the company’s counsel recommended the appointment of two temporary board members who would form a new committee to adjudicate the existing special committee’s authority.
The WeWork board voted six to two to approve retaining a search firm to identify independent directors, according to the filing.
This comes after lawyers for SoftBank last month wrote to WeWork’s board to request that it confirm the special committee is not authorized to act on behalf of WeWork.
Representatives for SoftBank and WeWork declined to comment on the motion.
WeWork’s special committee was formed last year to consider financial rescue packages for WeWork and is comprised of Bruce Dunlevie, a general partner at WeWork shareholder Benchmark Capital, and Lew Frankfort, ex-CEO of luxury handbag maker Coach.
SoftBank, which owns a majority stake in WeWork, currently controls roughly 66% of the fully diluted shares of WeWork, while controlling five of eight board seats at WeWork.
Neumann, who attracted criticism for his management of the company before being forced out in September, had negotiated the right to sell $970 million of his shares as part of the tender offer. Some $450 million of the tender offer was allotted to current and former employees.
Neumann filed a similar lawsuit against SoftBank last week for terminating the tender offer as well as a motion to consolidate his case with the special committee’s.
A ruling on the motion to consolidate the cases is expected next week, according to people familiar with the matter.
Reporting by Joshua Franklin and Anirban Sen in New York; Editing by Cynthia Osterman