WeWork Inc., once the biggest office tenant in Manhattan, has filed for bankruptcy listing nearly $19 billion of debts.
The former high-flying startup struggled to recover from the pandemic, which hurt the co-working company as widespread lockdowns drove professionals to work from home. Its Chapter 11 filing in New Jersey listed assets of $15 billion.
WeWork’s collapse into bankruptcy is the culmination of a years-long saga for the New York-based company, whose sudden rise and precipitous fall have captivated Wall Street and Silicon Valley alike. The firm’s undoing arguably started in 2019. In a matter of months, the company went from planning an IPO to laying off thousands and procuring a multi-billion-dollar bailout.
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While WeWork reached a sweeping debt restructuring deal in early 2023, it quickly fell into trouble again. In August, it said that there was “substantial doubt” about its ability to continue operating. Weeks later, it said it would renegotiate nearly all its leases and withdraw from “underperforming” locations. This time, it struck a restructuring agreement with creditors representing roughly 92% of its secured notes, and said it would streamline its rental portfolio of office space, according to a statement.
Other shared office-space firms have also stumbled after the pandemic upended working habits. Knotel Inc. and subsidiaries of IWG Plc sought bankruptcy in 2021 and 2020, respectively. That’s often the only option for floundering companies with costly leases, as US law enables insolvent firms to shed cumbersome contracts that are hard to cancel otherwise.
Reject Leases
WeWork’s real estate footprint sprawled across 777 locations in 39 countries as of June 30, with occupancy near 2019 levels. But the enterprise remains unprofitable.
“WeWork is requesting the ability to reject the leases of certain locations, which are largely non-operational and all affected members have received advanced notice,” it said in the statement.
The company said it intends to file recognition proceedings in Canada, though its locations elsewhere are not part of the bankruptcy process. Franchisees around the world are also not affected, and it said it would continue servicing existing members, vendors, partners, and other stakeholders as part of ordinary business.
WeWork was never a conventional business — for a substantial portion of its existence, it operated with a stated mission to “elevate the world’s consciousness.” The spiritual ethos that founder Adam Neumann and his wife, executive and co-founder Rebekah Neumann, fostered sometimes made the enterprise look more like a religion than a startup.
The company eventually went public in 2021 through a combination with a special purpose acquisition company, two years after its initially planned IPO. But that didn’t stop WeWork from hemorrhaging cash.
A final attempt at a turnaround in March saw the company ink an out-of-court restructuring that slashed around $1.5 billion of debt and extended other maturities.
--With assistance from Ameya Karve, Tan Hwee Ann and Dana El Baltaji.
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