Landlords that aren’t engaging in lease negotiations with WeWork can tap letters of credit to cover rent the bankrupt co-working space provider is withholding, the company said in a filing, WSJ Pro Bankruptcy reported. The brief was submitted on Wednesday to the U.S. Bankruptcy Court in Newark, N.J., in response to petitions from roughly 20 landlords who requested the court’s intervention to collect January and February rent payments. The New York-based company said in the filing that the “vast majority” of those landlords have access to letters of credit, a financial instrument that serves as an alternative to a traditional cash security deposit. Those landlords should go ahead and draw funds from the banks that issued the letters of credit on behalf of WeWork to cover the overdue rents, the company said in the filing. Lawyers for the landlords have argued in their filings that bankruptcy code requires WeWork to make rent payments without delay because they are considered administrative costs that are first in line to be paid as they come due. A number of previous bankruptcy cases indicated that security deposits shouldn’t be depleted to satisfy administrative costs, the lawyers said. WeWork has been in violation of bankruptcy rules by not making rent payments, they said.
