As committee counsel William Chandler of Wilson Sonsini explained in an Aug. The special committee, as you might expect, was not willing to walk away meekly. It argued that WeWork’s board had adhered to the principles of good corporate governance by appointing temporary, independent directors to decide what to do about the special committee’s suit and was continuing to practice good governance by following the instruction of those independent directors. On July 30, Skadden filed a Rule 41 motion to dismiss WeWork’s suit against SoftBank. The new committee, which was advised by independent counsel, instructed WeWork’s board to move to dismiss the complaint under Delaware’s Rule 41, which allows plaintiffs to end cases they’ve brought. On July 28, the new directors informed the WeWork board that the Dunlevie and Frankfort committee was not authorized to bring or proceed with the suit. Six board members voted to bring in the new directors, whom Chancellor Bouchard described in his opinion as the “new committee,” but the special committee said the vote was tainted because the board was beholden to SoftBank. Dunlevie and Frankfort, who voted against bringing in new directors, asserted that Skadden had apparently devised the hiring of temporary directors and worked with the company’s management to implement the plan. The company’s solution to the impasse, as Chancellor Bouchard recounted in Friday’s opinion, was to hire an executive search firm that, in turn, would bring in two new independent board members whose only job during their temporary term would be to decide whether the Dunlevie and Frankfort special committee could continue with the SoftBank suit. They also argued that every other board member was conflicted. SoftBank argued, among other things, that Dunlevie and Frankfort were conflicted because they stood to benefit personally from the aborted tender offer.ĭunlevie and Frankfort countered that the SoftBank agreement, as well as the 2019 board resolution designating them to negotiate the deal, authorized the special committee’s suit. SoftBank, which moved to dismiss the special committee’s lawsuit, also called on April 17 for the WeWork board to confirm that the special committee was not authorized to sue on the company’s behalf. Wilson Sonsini Goodrich & Rosati, which represents Dunlevie and Frankfort as members of the special committee, styled the complaint with WeWork (technically, the We Company) as the plaintiff.īut by then, four of the company’s eight board seats had been designated by SoftBank, including the seat held by WeWork’s current CEO. The special committee sued SoftBank in Delaware Chancery Court for breach of contract and breach of fiduciary duty. In April, SoftBank abandoned the tender offer. Existing WeWork shareholders were to be bought out in a $3 billion tender offer. The agreement effectively gave SoftBank control over WeWork’s board and management. The board members who were granted access to the Skadden materials - Bruce Dunlevie of Benchmark Capital and former Coach CEO Lew Frankfort - are members of a special WeWork committee that negotiated a bailout agreement last fall between the then-tottering company and its investor SoftBank. Want more On the Case? Listen to the On the Case podcast. Skadden partners George Zimmerman and Graham Robinson did not respond to an email requesting comment on behalf of the firm and the company. (Reuters) - In one of the strangest internal corporate battles I’ve ever covered, two members of the board of WeWork have won the right to access privileged communications between the company and its counsel from Skadden, Arps, Slate, Meagher & Flom – and the right to depose a Skadden M&A partner – in a ruling Friday by Chancellor Andre Bouchard of Delaware Chancery Court.
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