WeWork has filed a complaint alleging one of its landlords violated its lease agreement for a property in New York by threatening to draw down a multi-million dollar letter of credit (L/C).

The troubled co-working office operator claims that landlord Chetrit threatened during a telephone call to draw down on a US$2.4 million L/C issued by Goldman Sachs, in addition to a personal guarantee.

Eviction moratorium

WeWork claims in a complaint filed in New York State Supreme Court that its lease at 404 Fifth Avenue requires the landlord to first provide WeWork with a notice of default.

The flexible office provider also argues that even if Chetrit met the condition in the lease to provide a default notice before drawing on the L/C, the landlord is currently barred from doing so by New York state's eviction moratorium for tenants who have endured COVID-related hardship. It precludes the default notice from being served, WeWork argues.

Further allegations

WeWork also alleges Chetrit is in breach of the terms of another L/C for a different New York lease at 428 Broadway.

It is one of several office spaces in the city the company has said it is closing as it "rightsizes" its New York property portfolio.

WeWork has had a tumultuous year amidst plummeting demand for office space during the coronavirus pandemic and more companies embracing working from home permanently.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.