The subsidiary signs the 15-year lease, not WeWork.

So basically if the location turns out to be unprofitable, the subsidiary goes out of business or goes bankrupt and WeWork isn't stuck with the lease.

From the landlord's perspective, yes it is basically equivalent to a year lease with option to extend... not totally clear why the landlord would agree to that.

Must be nice to be an immortal corporation that can just spin off any debts you don't want to pay, while mere mortals with finite lifespans and education debt and medical debt and credit card debt cannot unless we die.

What if I told you that you can create and own corporations too?

Your comment seems disingenuous. What if I told you that piercing the corporate veil is regular and common when a single member LLC can't pay its debt, and an LLC isn't eligible for things humans need to improve their futures like student loans anyway?

Fantasy stories intrigue us mortals. But we do see big companies or llcs dodge responsibility.

"Disingenuous" is a pretty high charge. Not everyone knows about piercing the corporate veil.

Yes doctor you can bill that ultrasound to my LLC...

Fairly certain at least some of those debts can get passed on to your estate and/or children.

Your estate is just your assets, so yes to that. Your children, not in the US.

You can never involuntarily inherit debt in the US. You have to be a co-signer to begin with.

In some states for certain medical expenses family members can be forced to assume the debt.

Interesting. But strictly speaking you’re not inheriting debt. You were liable for the debt all the time.

I would agree with that assessment but for the fact that while alive the parent's medical debt can't be forced upon family members. It's a weird debt and I agree it isn't quite the same as inheriting it but I also think it isn't the same a jointly assumed liability while the parent is alive. The family members presumably have no say in whether or not the parent assumes the medical debt.

You do know that it’s people who setup these subsidiaries right?

There is nothing preventing you from doing this as an individual as well. The hard part isn’t the subsidiary or LLC, it’s getting the counter party to enter into an agreement with an entity containing no assets or long term viability.

Because money. This is restaurant expansion 101.

In this specific case a large sophisticated organization may be exploiting an unsophisticated organization, but really this is standard operating procedure for any franchise.

I am not sure if that is evil or pure genius. But why is the subsidiary allowed to release it to WeWork?

I mean by that theory I could open up 100s of Restaurant and close each of them that is not performing?

Wework Brooklyn #22 LLC signs the lease with the landlord and thus is responsible for the lease obligations. Wework LLC (proper) guarantees these lease payments for only 6- 12 months of the lease. After this time the only party responsible for the lease is the LLC that was formed.

Landlords are likely agreeing to this only because Wework would never be able to sign a lease with any owner if they defaulted on a location.

Which sets them up for WeWork subsidiaries to default on any building that's more than X months old and unprofitable. That's a terrible deal for the landlord, if the landlord priced it as a 15 year deal instead of a one year. Absolutely great for WeWork. Terrible for anyone who wants offices, since WeWork will sit on a large chunk of the market.

If WeWork subsidiaries were defaulting right and left they wouldn't be able to get these deals.

They aren't, so they are.

Your comment seems to imply that the landowner has no choice.

Agreed. If, and when, they default it would most likely make news in the real estate / tech sector. Something seems too good to be true here but so far they haven't closed any locations.

Maybe WeWork is picking up left-over locations. Some rent is better than no rent.

If the landlord could find a better tenant, WeWork would have zero chance to rent any of it.

They'd be smart to move towards a franchise model then I suppose?

Why would someone from wework want to outline their lack of lease liability. I don't see how anything I commented was positive or negative, I stated some facts.

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