A committee made up of WeWork junior creditors has asked the bankruptcy court handling WeWork's reorganization to approve a lawsuit against SoftBank, the Japanese conglomerate that is WeWork's largest investor.

The committee alleged in a filing last week that SoftBank and other investors representing 62% of WeWork's unsecured notes used pre-bankruptcy debt restructuring in 2023 to “mitigate their losses and elevate their position in” WeWork's capital structure ahead of formal bankruptcy, The Wall Street Journal reports.

“While the purported purpose of the ... Transactions was to extend the Debtors’ runway, the real motivation was to elevate SoftBank’s and the [other investors'] positions in the Company’s capital structure and repay $300M in debt owed to SoftBank in advance of maturity, at par,” the filing said.

“In short, the … Transactions created over $2B of new secured claims and collateralized previously unsecured debt while offering the Debtors little value, at the direct expense of unsecured creditors.”

That move left the junior creditors, including a number of WeWork landlords, subordinated to SoftBank and the other investors, the committee alleges. The committee has asked the court to allow it to pursue claims against SoftBank and the other creditors.

Nearly a year ago, WeWork inked a deal with SoftBank and other investors to convert about $1.5B of the coworking company's debt into equity stakes.

“Since the start of our Chapter 11 cases, we have prioritized transparency and full cooperation with our key stakeholders,” a WeWork spokesperson told Bisnow by email Monday, adding that the company is focused on its lease renegotiations and the Chapter 11 process overall and is “continuing to make significant progress.”

SoftBank didn't respond to a request for comment from Bisnow Monday morning.

The filing is the latest in a tumultuous bankruptcy for the coworking giant, which began in November. In February, the company said that it needs to raise more money to see it through its reorganization, especially to continue to pay rent during the process of reducing its real estate commitments.

If WeWork isn't able to raise new money through a debtor-in-possession facility, the company said, it might not be able to complete its reorganization.