WeWork, the office-sharing firm, submitted a Chapter 11 bankruptcy protection request in a federal court in New Jersey. The company stated that it had reached agreements with the majority of its secured noteholders and outlined intentions to cut back on “non-operational” leases.
The bankruptcy filing pertains exclusively to WeWork’s locations in the United States and Canada. In their initial submission, WeWork revealed debts totalling $18.65B in contrast to total assets amounting to $15.06B.
“I am deeply grateful for the support of our financial stakeholders as we work together to strengthen our capital structure and expedite this process through the Restructuring Support Agreement,” WeWork CEO David Tolley said. “We remain committed to investing in our products, services, and world-class team of employees to support our community.”
WeWork’s Fall: From $47B Valuation to Corporate Collapse
WeWork has experienced one of the most significant corporate collapses in U.S. history in recent years. Initially valued at $47B in 2019, led by Masayoshi Son’s SoftBank, the company attempted an unsuccessful public offering five years ago.
The Covid pandemic exacerbated the situation, with many companies abruptly terminating their leases and the ensuing economic downturn prompting more clients to close their businesses. In an August regulatory filing, the company acknowledged the possibility of bankruptcy.
In 2021, WeWork went public through a special purpose acquisition company but has since witnessed a staggering 98% loss in its value. In mid-August, it announced a 1-for-40 reverse stock split to raise its shares above $1, a prerequisite for maintaining its New York Stock Exchange listing.
Before a trading halt, WeWork shares had plummeted to around 10 cents and were trading at approximately 83 cents. Co-founder and former CEO Adam Neumann expressed disappointment regarding the filing.
“It has been challenging for me to watch from the sidelines since 2019 as WeWork has failed to take advantage of a product that is more relevant today than ever before,” Neumann said in a statement to CNBC. “I believe that, with the right strategy and team, a reorganization will enable WeWork to emerge successfully.”
WeWork’s Recent Assurances: $16B in Lease Obligations Cast Doubt
As recently as September, the firm affirmed its commitment, stating it actively renegotiated leases and asserted its enduring presence. WeWork, as indicated in securities filings, bore nearly $16B in long-term lease obligations.
According to regulatory filings, the company leases expansive office space, encompassing millions of square feet across 777 global locations, according to cnbc.com
WeWork has enlisted the legal guidance of Kirkland & Ellis and Cole Schotz. PJT Partners will act as its investment bank, supported by C Street Advisory Group and Alvarez & Marsal.