Wework dragged to court over refusal to give up lease on London Southbank office
Embattled co-working space Wework is being dragged to court because it is refusing to forfeit the lease at one of its most profitable locations on London’s Southbank, according to reports.
Almacantar, the property developer who oversees the building at 10 York Road, has been trying to kick the troubled American firm out since it filed for Chapter 11 Bankruptcy in the US.
One insider told React News, the publication which first reported the findings, owners want “Wework out” because it “destroys” values due to the weakening of its covenant.
Wework is understood to be up to date on rent payments for the 300,000 sq ft space, and forks out £19.7m to occupy the tower each year.
The ongoing case hinges on whether or not the guarantor for Wework’s lease can be proven to be the company that entered into Chapter 11 bankruptcy.
Wework is arguing its warrantor has not filed for bankruptcy.
Under UK law, landlords can make a tenant forfeit a lease if the guarantor of a company enters into administration.
But on the day the firm filed for bankruptcy in the US, the guarantor of its assets, WWC-A, was divided into two companies WWC-B and WWC-C.
The latter firm was allocated as the lease guarantor, while WWC-B was handed other liabilities.
“When WeWork filed for Chapter 11, it was WWC-B that filed. WWC-C did not file, and has not done so since,” the outlet said.
A spokesperson for Wework said: “We will vigorously defend ourselves in court, and fully expect to prevail in this process. It remains business as usual for our members and we look forward to continuing to deliver the signature WeWork experience at this flagship WeWork location in the Capital.”
Almacantar declined to comment.
Today’s developments serve as another blow for the trendy workspace provider who has been quietly exiting a number of its London sites.
Reports suggest it is in talks to exit The Cursitor, a site in Holborn that is no longer listed on its website, and has closed three sites in Shoreditch and one in Blackfriars.
Wework is London’s biggest tenant, and City A.M has previously reported that office vacancies in the capital could rise to close to 10 per cent if the troubled company goes bust.