WeWork’s founder and former chief executive, Adam Neumann, has threatened to sue SoftBank, the office space company’s biggest investor, after it pulled out of a deal to buy $3bn (£2.4bn) of WeWork shares – including almost $1bn from Neumann himself.

SoftBank, which is run by the Japanese billionaire Masayoshi Son, announced on Thursday it was terminating a $3bn share tender rescue deal hammered out last October to save WeWork from collapse.

SoftBank said it had “no choice” but to scrap the rescue deal because WeWork had failed to meet several conditions. It also cited concerns about “multiple, new, and significant pending criminal and civil investigations”.

The Japanese conglomerate said it remained “fully committed to the success of WeWork” but “several of those conditions were not met, leaving SoftBank no choice but to terminate the tender offer”.

The deal would have mostly benefited Neumann, who was lined up to sell $970m worth of shares even as thousands of WeWork employees were laid off with very little compensation.

“Adam Neumann, his family, and certain large institutional stockholders, such as Benchmark Capital, were the parties who stood to benefit most from the tender offer,” SoftBank said. “Together, Mr Neumann’s and Benchmark’s equity constitute more than half of the stock tendered in the offering. In contrast, current WeWork employees tendered less than 10% of the total.”

A special committee of WeWork’s board said it was disappointed that SoftBank had pulled out of the deal and it was considering “all of its legal options, including litigation”.

The deal was hastily arranged in October 2019 as part of SoftBank’s rescue of the office-space provider after its planned flotation on the stock market was scrapped. WeWork had repeatedly cut the price of the IPO as investors balked at its initial valuation of up to $65bn. Neumann could have made a potential $14.3bn paper fortune if the company had floated at the top end of estimates.

Softbank’s decision to pull out of the share deal means it will also no longer be obliged to provide WeWork with $1.1bn in debt financing, leaving the office space provider facing a cash crunch as many of its tenants across the world pull out because of the Covid-19 crisis and government-imposed lockdown conditions.

WeWork signs long-term leases with commercial landlords then rents that space to freelancers and small businesses, which have been particularly badly hit by the coronavirus crisis global economic shutdown. The company has warned its bondholders that it does not expect to hit its 2020 financial targets.

WeWork has grown to become the single biggest office tenant in Manhattan, and the second-largest in London after the government. It has expanded from offices to student halls-style communal living blocks, private schools and luxury gyms and boot camps.

The president of the Boston Federal Reserve bank, Eric Rosengren, warned in September that the business model of co-working companies such as WeWork could make the next recession worse by sparking a run on commercial property.

WeWork has signed long-term rental commitments worth $47bn with US landlords alone. If WeWork were to go bust its landlords would struggle to collect the promised lease payments they are owed. That could leave them unable to pay their bank loans, and in turn leave banks facing losses.

At a company party in 2018 Neumann told his staff that WeWork’s mission was to “to elevate the world’s consciousness” and that “there are 150 million orphans in the world. We want to solve this problem and give them a new family: the WeWork family.”

Neumann’s bravura did not go down so well with Wall Street investors when WeWork published its flotation prospectus in August 2019. It warned potential investors: “Adam’s voting control will limit the ability of other stockholders to influence corporate activities and, as a result, we may take actions that stockholders other than Adam do not view as beneficial.”

The prospectus demanded that each of “Adam’s” shares should carry 20 times the votes of ordinary shares, and that his wife should have a say in selecting his successor should he die.

He has also had to fend off damaging allegations about his conduct, including the revelation that he smoked cannabis on a private jet. The company said it would sell the $60m Gulfstream plane, which Neumann had used to attend tequila-fuelled parties with the likes of the Red Hot Chili Peppers, Donald Trump’s son-in-law, Jared Kushner, and Will Smith’s son Jaden.