Adam Neumann’s Era of Excess and Eccentricity Is Over at WeWork

(Bloomberg) — It was just weeks ago that Adam Neumann was running one of the world’s most valuable startups. As chief executive officer of WeWork, he was on the verge of an initial public offering of a venture once valued at $47 billion.

Today, in a remarkable fall from grace, the office-sharing company that he co-founded in 2010, the one he promised would elevate the world’s consciousness, is no longer his.

SoftBank Group Corp., the company’s largest investor, is taking control of WeWork as part of a desperately needed lifeline. It brings an end to an era marked by lavish spending and self-dealing that deepened the company’s losses and eroded investors’ faith in Neumann’s ability to lead. Even with the capital infusion and new ownership, it also leaves WeWork beset by woes that include sagging morale, landlord unrest and tens of billions of dollars in rent payments.

“Obviously the biggest challenge is just steadying the ship,” said Duncan Clark, chairman of BDA China, an advisory firm. “Can the company remain solvent? It’s a race against time to trim costs, sell assets, change culture.”

The rescue package is personally humbling for the 40-year-old Neumann, a natural showman with a penchant for speaking in grandiose terms about changing the world while doling out shots of tequila in the workplace. But it’s also poised to make him a very rich man.

Read more: WeWork Taps ‘Adult in Room,’ Ex-Amazon Exec to Replace Neumann

In an unusual deal that is almost certain to spark the ire of WeWork staffers being dismissed by the thousands, Neumann will walk away with as much as $1.2 billion as well as a $500 million credit line from SoftBank, after it pushed him out as chief executive officer last month. He’ll remain as a board observer and can assign two board seats.

The deal serves to give WeWork a second chance at least in the short-term. SoftBank will soon provide WeWork with $1.5 billion, accelerating a financing agreement that was originally scheduled for April, people familiar with the plans have said. SoftBank is also organizing a $5 billion debt package, which will include contributions from SoftBank itself, Mizuho Financial Group Inc. and other lenders.

Emblematic of high-flying, growth-at-all-costs unicorns, WeWork’s never made a penny in profits, losing $900 million in the first half of this year. Burning through cash since its inception, it faced a crunch that could have left the company short of funds as soon as next month. Much of that binge stems from Neumann, a fierce and unpredictable negotiator unafraid of spending his way to growth: In the past nine years, WeWork has opened 425 office locations in 36 countries, become Manhattan’s biggest tenant, and upended the stodgy world of commercial real estate.

Serious questions remain about its business model of renting and renovating office space that it leases to individuals and companies. That strategy has made it the biggest private office tenant in cities like New York and London. But it’s also left it in a precarious position. It has some $47 billion of future rent payments due and some $1 billion in renovation costs.

Landlords and tenants have become cautious when dealing with the firm. Google has walked away from a potential Toronto lease and landlords are reaching out to WeWork rivals to see if they will take over WeWork leases or buildings if it becomes necessary.

SoftBank also must grapple with reducing costs including a workforce of more than 12,000 people that had grown bloated under Neumann. WeWork already plans to lay off 2,000 people and sell some non-core businesses.

Even as it reduces the workforce, SoftBank will also need to deal with growing dissatisfaction among employees, some of whom have worked for years in anticipation of an initial public offering that never materialized. At least five C-level executives have headed for the exits in recent weeks, and some staffers, unsure of their fate, stopped reporting for duty altogether, people familiar with the situation said last week.

As part of SoftBank’s plan, one of its executives, Marcelo Claure, will take over as chairman of WeWork’s board, one of the people said. WeWork appointed Artie Minson and Sebastian Gunningham as co-CEOs last month after investors pushed back against the IPO.