Illustration: Sarah Grillo/Axios

SoftBank was sued Tuesday morning by a special committee of WeWork's board of directors for alleged breaches of contract and fiduciary duty related to SoftBank's decision to cancel a $3 billion tender offer for WeWork shares.

Why it matters: SoftBank is viewed by many in the private markets as an unfaithful partner. If this reaches trial, that reputation could either become widely cemented or reversed.

SoftBank last week gave two reasons for bailing on the tender:

1. The emergence of civil and criminal investigations that could create material liabilities.

  • In its lawsuit, the special committee claims that SoftBank was aware of the investigations. Not when it signed the original deal in October, but when it signed an amended agreement in late December.

2. WeWork not meeting all of the closing conditions, including a consolidation of its joint venture in China.

  • In its lawsuit, the special committee claims the China roll-up failed because SoftBank used its "influence" to persuade certain minority investors in the JV to not enable the deal.

The special committee is comprised of venture capitalist Bruce Dunlevie, a partner with early WeWork investor Benchmark, and former Coach CEO Lewis Frankfort.

  • In short, they accuse SoftBank of having "buyer's remorse" — particularly as the Japanese investment giant came under pressure from activist investor Elliott Management.
  • They also dispute SoftBank's claims that it doesn't have effective control of WeWork.
  • Representatives for SoftBank and WeWork declined to comment.

The bottom line: It is highly unusual for a VC-backed company to sue one of its investors, let alone its largest investor. But that's what's happening, and hundreds of millions of dollars are at stake for current and former WeWork employees who had been promised a payday.

Read the lawsuit, which was filed in Delaware Chancery Court.

Update: SoftBank issued a statement saying it will "vigorously defend" the suit, adding that it "is a desperate and misguided attempt now to rewrite that agreement and to rewrite the history of the past six months."

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