WeWork hasn’t paid certain landlords January rent as part of its negotiation strategy, lawyers representing the creditor committee in bankruptcy said in a court filing on Tuesday, WSJ Pro Bankruptcy reported. The co-working company is withholding January rent payments of about $33 million “in an effort to strong-arm negotiations with certain landlords,” while receiving fees from its members that occupy the space, according to the bankruptcy court filing. The lawyers said in the filing that while they understand WeWork’s need to rationalize its lease portfolio as part of financial restructuring, the bankruptcy code clearly states that while in bankruptcy, rent payments for unrejected leases must be paid. In fact, WeWork’s budget recently approved by the court “expressly provided for the payment of January rent,” the lawyers said. The company in November filed for chapter 11 protection with the U.S. Bankruptcy Court in New Jersey. A WeWork spokesman said that the company’s temporary actions of nonpayment “are intended to expedite conversations to reach resolutions that are in the best interests of our entire ecosystem.” “We remain committed to finding mutually beneficial solutions that are better aligned with today’s market conditions, and that will enable us to successfully move forward in our restructuring process,” the spokesman said. Landlords that weren’t paid January rent include City Office REIT, which owns and operates office properties mostly in Sunbelt cities such as Dallas, Phoenix and Tampa, according to the court filings and the company’s website.
