By Jeff Montgomery

Law360 (October 7, 2020, 4:16 PM EDT) -- SoftBank Group Corp. told Delaware's Chancery Court late Tuesday that COVID-19 travel restrictions in Asia are hamstringing its efforts to rebut claims that the company secretly undermined approvals in China that were key to closing a canceled, $3 billion buy of WeWork shares.

The assertions appeared in a company motion to allow recorded and transcribed interviews, without an oath, rather than formal depositions in both China and Japan as part of the company's discovery efforts in defending against a suit to enforce SoftBank's tender offer. The now-uncertain deal would give the Japan-based multinational conglomerate a larger, controlling stake in WeWork.

Former WeWork CEO Adam Neumann and others have accused SoftBank of pressuring Chinese investors in different parts of that country to hold on to, instead of relinquishing, crucial rights in connection with the roll-up of two WeWork joint ventures in Asia. The failure of the roll-up allegedly triggered one of seven possible termination events for the overall deal.

But China and Japan both have imposed pandemic-related quarantine and international travel restrictions that would add to the burden and risk of travel outside those countries by witnesses sought for depositions by SoftBank, the company said Tuesday. Other rules in those countries would meanwhile prohibit oaths for traditional interviews, SoftBank said.

Neumann, SoftBank argued, has pressed for deposition of SoftBank CEO Masyoshi Son in Taiwan, where oath and travel restrictions are less stringent, or in Japan, but has opposed the "ChinaCo" joint venture investor depositions as unnecessary.

"In a fair trial, both defendants and the court would have the minority ChinaCo investors' testimony," SoftBank argued. "Fairness also dictates that the same procedure should apply to all similarly situated foreign witnesses, not just the witnesses from whom plaintiffs want to take testimony."

SoftBank announced a $3 billion tender offer in November as part of a wider "master transaction agreement" and $9.5 billion agreement to bail out The We Co., WeWork's parent company. It reported that it was terminating the tender offer in April, citing various reasons, including the New York-based WeWork's failure to earn certain antitrust approvals, the effects of the COVID-19 pandemic and the failure to close on an agreement involving the joint ventures in China.

"Documents show that the minority ChinaCo investors, acting on their own volition in their own economic interests, unequivocally and repeatedly refused to waive their co-sale rights," the SoftBank motion said Tuesday. It added that already-produced communications "show that minority investors resisted" the transaction on their own.

Neumann, who controls We Co. stockholder We Holdings LLC, and others sued to enforce the deal in April, acting through a special committee of WeWork. The suit accuses SoftBank of buyer's remorse and agreement breaches prompted by severe weakening of its own business.

In a separate court document, Neumann and the other parties who sued said they "will not, and should not be required to accede to the admissibility of transcribed video interviews of these [ChinaCo] nonparties as a condition to Mr. Son sitting for a transcribed video interview."

Nonparties in the case "are not within this court's jurisdiction and cannot be effectively deterred from or sanctioned for providing responses during their interviews that are misleading, incomplete, or outright false," the Nuemann parties said, "particularly when they have not been placed under oath."

Neumann's camp won a victory in August with the release of an opinion by Chancellor Andre G. Bouchard that said We Co.'s current, Softbank-controlled board could not block a legacy special committee from obtaining communication between WeWork's parent company and its counsel, including Skadden Arps Slate Meagher & Flom LLP.

WeWork, which has never turned a profit, leases real estate through long-term agreements and refurbishes those properties before renting them to tenants with shorter-term needs.

Representatives for The We Co., SoftBank Vision Fund, Softbank Group Corp. and the original We Co. special committee members did not immediately respond to requests for comment.

The We Co. is represented by Robert S. Saunders, Sarah R. Martin and George A. Zimmerman of Skadden Arps Slate Meagher & Flom LLP.

SoftBank Vision Fund (AIV M1) L.P. is represented by Michael A. Barlow and E. Wade Houston of Abrams & Bayliss LLP and John B. Quinn and Molly Stephens of Quinn Emanuel Urquhart & Sullivan LLP.

SoftBank Group Corp. is represented by Elena C. Norman, Rolin P. Bissell and Nicholas J. Rohrer of Young Conaway Stargatt & Taylor LLP and Erik J. Olson, James Bennett and Jordan Eth of Morrison & Foerster LLP.

Adam Neumann and We Holdings LLC are represented by William M. Lafferty, Kevin M. Coen, Sabrina M. Hendershot and Sara Toscano of Morris Nichols Arsht & Tunnell LLP; Eric Seiler, Philippe Adler and Mala Ahuja Harker of Friedman Kaplan Seiler & Adelman LLP; and William Christopher Carmody, Shawn J. Rabin, Arun Subramanian and Cory Buland of Susman Godfrey LLP.

The original We Co. special committee members are represented by William B. Chandler III, Brad D. Sorrels, Lori W. Will, Lindsay Kwoka Faccenda, Leah E. Brenner, David J. Berger and Dylan G. Savage of Wilson Sonsini Goodrich & Rosati PC.

The case is The We Co. v. SoftBank Group Corp. et al., case number 2020-0258, in the Court of Chancery of the State of Delaware.

--Additional reporting by Rose Krebs, Benjamin Horney, Mike LaSusa, McCord Pagan, Dave Simpson, Rachel Stone and Tom Zanki. Editing by Abbie Sarfo.

Correction: This story has been updated to correct an attorney's name.

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