WeWork, DOJ Reach Agreement on Redacting Client List
Instead of all details, the company will file some consolidated lists with limited information.
In its bankruptcy process, WeWork — backed by its creditors, as CoStar reported — has pushed to keep its client list private. The company claimed details would allow competitors to poach customers, which could reduce cash flow and the ability to make court-ordered debt payments.
The Department of Justice objected, arguing that transparency is key to the Chapter 11 bankruptcy process.
A hearing on the subject was supposed to take place on at 2 p.m. Wednesday, December 20. But a note on the website of the District of New Jersey U.S. Bankruptcy Court said that the hearing was cancelled and “matters have been resolved.”
A certification of no objection described what WeWork would have to provide, including:
- Consolidated list of WeWork’s 30 largest unsecured creditors;
- Consolidated list of creditors instead of a separate mailing matrix for each debtor;
- Redaction or withholding of certain confidential information of customers;
- Redaction of certain personally identifiable information;
- Waiver of the requirement to file a list of equity holders and provide notices directly to equity security holders; and
- A grant of related relief.
The document noted that the objection deadline had passed, and the motion had been granted on a final basis. There is a provision for the U.S. Trustee to reserve rights about redactions should any of WeWork’s chapter 11 cases under its legal entities change to a chapter 7 case.
Bloomberg Law first reported the issue in late November when it noted that WeWork was seeking “authority for a wholesale redaction” of names from bankruptcy filings. The Department of Justice’s bankruptcy watchdog warned that transparency is key to Chapter 11 bankruptcy proceedings. “The U.S. Trustee has challenged creditor secrecy in several other prominent bankruptcies this year, especially in crypto Chapter 11 cases,” reporter Evan Ochsner wrote.
Other outlets, including Crain’s New York Business and the Real Deal, had reported about the tensions between the sides and noted the Wednesday hearing.
This isn’t the first time an objection was worked out in the case. During negotiations between WeWork and its landlords, Kato International, for one, filed an objection to WeWork’s potential legal ability to reject leases and force landlords to leave space vacant. But Kato shortly after withdrew the objection.
This is a common pattern in legal disputes when parties take legal action for leverage in negotiations for what they want.