WeWork Bankruptcy: A Former Wall Street Darling’s Stunning Fall
WeWork was once seen as a Wall Street darling that promised to transform the way people went to work around the world. The coworking giant has filed for bankruptcy in the US today.
The New York-based corporation struggled to recover from the effects of the COVID-19 pandemic on the economy and its failed initial public offering in 2019.
WeWork filed a Chapter 11 filing in New Jersey, stating its assets and liabilities were between $10 billion and $50 billion. It can keep operating while it works out a plan to repay its debts.
Impact On WeWork’s Real Estate Portfolio
WeWork said it entered into a restructuring support deal with its stakeholders to reduce the company’s debt while further evaluating its commercial office lease portfolio.
The entity is also requesting the “ability to reject the leases of certain locations,” which it says are largely non-operational, as part of the bankruptcy filing.
In September, WeWork said it could exit more underperforming locations. As of June 30, the corporation had 777 locations in 39 countries.
Keep Reading
Efforts To Recover Since Neumann’s Exit
The possibility of bankruptcy has hovered over WeWork for quite some time. The company is paying the price for aggressive expansion in its early years.
It went public in October 2021 after its first attempt collapsed. The debacle led to the ouster of Adam Neumann, the Founder and Chief Executive Officer of WeWork.
Japan’s SoftBank stepped in to help. Despite efforts to recover since Neumann’s exit, including cuts to operating costs and rising revenue, WeWork has struggled.
WeWork Sounds An Optimistic Note
The development comes at a time when leasing demand for office space remains weak. COVID-19 notably led to rising vacancies in office space as working from home became popular.
While the full impact on WeWork’s real estate footprint is unclear, the company sounded an optimistic note on Monday, noting “there will be no change to the way we operate.”
Calling the bankruptcy filing “disappointing”, Neumann told CNBC: “I believe that, with the right strategy and team, a reorganisation will enable WeWork to emerge successfully.”
