[ummonk]

>Some of SoftBank’s cash could also be used by Mr. Neumann to repay hundreds of millions of dollars of personal bank loans, one of the people said.

Why would they save his hide when the money could be used to cover more of We’s enormous unending losses?

[notatoad]

They're not saving his hide. This is the old axiom "when you owe somebody $100k, you have a problem. When you owe somebody $100m, they have a problem".

SoftBank is paying off Adam Neumann's creditors because that's how finance works - JP Morgan and SoftBank have made some deal to make sure they both come out okay, without really caring about the end result for Adam. If it's good for him, that's incidental.

[big_chungus]

Because they want him gone. Even with financial difficulties, it can be very difficult to remove a person who does not want to leave from governance (depending, of course, on how by-laws are written.) Given the propensity of unicorns to make founders un-impeachable benevolent dictators for life, they likely need his consent.

Though I don't know him personally, given what I've read of Mr. Neumann, I wouldn't put it past him to take the company down with him in pursuit of his ego. By his comments of wanting to become president of the world, solve world hunger, etc., he seems to have a massive God complex. It is probable he remains convinced he is the best person to lead wework.

[harryh]

Because SoftBank wants additional control of the company. In order to get that, they need more stock. Stock than Neumann owns. So they'll pay him for it.

[tomatocracy]

They could also buy the existing debt from current lenders then wait for the inevitable restructuring before putting more money in and getting equity out of that without having to buy it from Neumann. They seem to have rejected that approach given this news but it would be interesting to know why - is it because they think it would damage the business (tenants leaving etc in reaction to a restructuring/insolvency) or because they were worried about the reputational damage to Softbank/Vision Fund?

[koolba]

It maybe be cheaper to pay him out then to fight him in court.

[detaro]

I'd guess he can block attempts to further take control from him, and they'd need to buy out parts of his shares or otherwise compensate him.

[bhouston]

He has some type of captive control of SoftBank. Strange.

[detaro]

Not of SoftBank, but of WeWork (looked it up: chairman of the board, holding lots of shares). If SoftBank wants free reign to "fix" WeWork as they think is best, they need to buy him out or otherwise convince him that it's in his best interest to let them.

EDIT: not majority of shares/voting power, he gave that up when stepping down

[malandrew]

I thought he already gave up the majority voting power a few weeks ago when trying to salvage the IPO. Does he still have that power?

[detaro]

Indeed, I apparently misread that. So probably still influential, but not majority.

[wastedhours]

He still has outweighted voting rights on his shares I think, but now at a non-majority level by the seems of it (I think the old model was 10 votes per share vs most other shareholders 1).

[malandrew]

Yeah, looks like it is now 3:1.

[greglindahl]

When you owe someone a lot of money, you can make it their problem.

[malandrew]

Because the personal loans were made by JP Morgan and they are probably making SoftBank do this so they help secure the $3 billion in debt. I imagine the that the plan will involve wiping out Neumann. His properties will probably all be liquidated and then SoftBank will pay off what remains.