WeWork, once worth $47 billion, files for bankruptcy
Flexible office space company WeWork has filed for Chapter 11 bankruptcy, a remarkable collapse for the once high-flying startup co-founded by Adam Neumann and funded by SoftBank, BlackRock and Goldman Sachs.
The New York-based company, which raised more than $22 billion and was valued at $47 billion at its peak, listed assets and liabilities of between $10 billion and $50 billion in its filing with a federal court in New Jersey.
WeWork Chief Executive David Tolley said about 90% of the company’s lenders have agreed to convert their $3 billion in debt into equity. “Now is the time for us to move forward into the future by aggressively addressing our existing leases and significantly improving our balance sheet,” he said in a statement.
WeWork’s bankruptcy filing is limited to locations in the United States and Canada, it said.
WeWork India has become one of the strongest units in the WeWork franchise and is largely safe from bankruptcy because the majority of it is owned by Embassy Group. The Indian unit makes money and does not need outside capital to operate, the Indian official told local media last week.
WeWork is grappling with the aftermath of a period of aggressive growth that has resulted in a portfolio of many underperforming properties.
The company signed long-term leases during the market peak in the late 2010s, redeveloping these sites and then leasing them for terms as short as a month. The company’s strategy faced significant challenges as the pandemic eroded demand for shared workspaces, leading to a surge in vacancies and ongoing financial obligations to landlords amounting to billions of dollars. dollars in rent.
WeWork’s IPO faced setbacks in 2019 due to concerns over losses and governance, leading to the withdrawal of its IPO and the departure of CEO Neumann. Neumann’s departure led to a costly settlement with WeWork and SoftBank in 2021. The company ultimately went public via a SPAC merger, valuing it at $9 billion, and projected cash operating income of $2 billion by 2024.
An image from WeCrashed, a television show produced by Apple. The spectacular rise and fall of WeWork has also been the subject of several books and television shows. (Image: Apple)
WeWork restructured its balance sheet this year, reducing its debt by $1.5 billion and delaying its maturity to 2027. Despite these efforts, the company’s market value has fallen to less than $50 million, and bankruptcy could lead to the cancellation of the shares of existing shareholders, with obligations. are now trading at difficulty levels.
“We have defined a new category of work and these steps will ensure we remain the global leader in flexible working. I am deeply grateful for the support of our financial stakeholders as we work together to strengthen our capital structure and accelerate this process through the Restructuring Support Agreement. We remain committed to investing in our world-class products, services and team of employees to support our community,” Tolley said.
In its August earnings disclosure, WeWork publicly acknowledged “substantial doubts» on his ability to continue.
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