WeWork files for bankruptcy, wants to reject leases

The New York-based firm stated it had struck a restructuring settlement with collectors representing roughly 92% of its secured notes and would streamline its rental portfolio of workplace house, in keeping with an announcement. The Nov. 6 Chapter 11 submitting in New Jersey listed belongings of $15 billion. 

WeWork’s collapse into chapter 11 is the end result of a years-long saga for the corporate, which was as soon as the most important office tenant in Manhattan. Its sudden rise and precipitous fall have captivated Wall Avenue and Silicon Valley alike.

The agency’s undoing arguably began in 2019. In a matter of months, the corporate went from planning an IPO to shedding 1000’s and procuring a multi-billion-dollar bailout. 

Pandemic Modifications

Different shared office-space corporations have additionally stumbled after the pandemic upended working habits. Knotel Inc. and subsidiaries of IWG Plc sought chapter in 2021 and 2020, respectively.

Whereas WeWork reached a sweeping debt restructuring deal in early 2023, it shortly fell into hassle once more. In August, it stated that there was “substantial doubt” about its skill to proceed working. Weeks later, it stated it will renegotiate almost all its leases and withdraw from “underperforming” places.

Chapter is usually the one choice for floundering corporations with pricey leases, as U.S. regulation permits bancrupt corporations to shed cumbersome contracts which might be exhausting to cancel in any other case.

WeWork’s actual property footprint sprawled throughout 777 places in 39 international locations as of June 30, with occupancy close to 2019 ranges. However the enterprise stays unprofitable. 

Reject Leases

“WeWork is requesting the power to reject the leases of sure places, that are largely non-operational and all affected members have obtained superior discover,” it stated within the assertion. 

WeWork stated it intends to file recognition proceedings in Canada, although its places elsewhere will not be a part of the chapter course of. Franchisees around the globe are additionally not affected, and it stated it will proceed servicing current members, distributors, companions, and different stakeholders as a part of unusual enterprise. 

WeWork was by no means a traditional enterprise—for a considerable portion of its existence, it operated with a acknowledged mission to “elevate the world’s consciousness.” The non secular ethos that founder Adam Neumann and his spouse, government and co-founder Rebekah Neumann, fostered typically made the enterprise look extra like a faith than a startup.

The corporate ultimately went public in 2021 by means of a mixture with a particular objective acquisition firm, two years after its initially deliberate IPO. 

However that didn’t cease WeWork from hemorrhaging money. A remaining try at a turnaround in March noticed the corporate ink an out-of-court restructuring that slashed round $1.5 billion of debt and prolonged different maturities.