WeWork files for bankruptcy

Co-working service company WeWork filed for bankruptcy protection in a court in New Jersey (USA) on November 6.

WeWork said it had reached a settlement with most of its creditors and would wind down its operations. The filing said the bankruptcy would be limited to WeWork locations in the U.S. and Canada. The company has between $10 billion and $50 billion in debt.

"I am deeply grateful for the support of our stakeholders as we strengthen our capital structure and implement this process through the Restructuring Support Agreement. We remain committed to investing in our high-quality products, services and employees to support our communities," WeWork CEO David Tolley said in a statement. WeWork shares were suspended on November 6.

WeWork logo outside its office in San Francisco (California, USA). Photo: Reuters

Backed by Japanese telecommunications giant SoftBank, WeWork was valued at $47 billion in 2019. They were a darling of venture capitalists, but their performance fell short of expectations.

The company fell into turmoil after its 2019 IPO failed amid investor skepticism about the shared office model. That same year, co-founder Adam Neumann was ousted amid scandals over his management style.

The pandemic further complicated WeWork’s operations as many companies abruptly ended their office leases. The subsequent economic downturn also forced more businesses to close.

In 2021, WeWork officially went public through a merger with a special purpose acquisition company (SPAC). However, since then, they have lost 98% of their value. In August 2023, WeWork mentioned the risk of bankruptcy.

Former WeWork CEO and co-founder Adam Neumann called the bankruptcy filing “disappointing.” “I’ve watched the company slide since 2019, failing to deliver on a product that’s more relevant than ever. But I believe that with the right strategy and the right people, this restructuring will bring WeWork back to life,” he said.

WeWork’s business model is to lease office buildings (or individual floors) long-term and then renovate them for rent. Rather than simply providing flexible and short-term seating, they plan to attract customers with luxurious, modern spaces and convenient services for community interaction, entertainment, and dining.

WeWork reportedly leases about 777 locations across 39 countries, 30% of which are in the U.S. The company will pay an estimated $10 billion in rent starting in the second half of this year through the end of 2027, and another $15 billion starting in 2028.

Ha Thu (according to CNBC)

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