WeWork, the shared office firm that was once valued at $47 billion - the equivalent of £38 billion - has been forced to file for bankruptcy in the US.
WeWork was said to be restructuring its "vast debts" and had done the move as a last resort, to give it protection from its creditors and landlords.
The bankruptcy will affect the company's business in the US and Canada. The firm has so far said its co-working spaces will remain open, including those based in the UK and they see no changes being made to the UK model.
In a letter seen by the Evening Standard, David Tolley Chief Executive Officer of the company wrote to "community members" about the bankruptcy.
He wrote: "When I wrote to you just a few short weeks ago, I expressed my confidence in our future and WeWork’s pledge to put our members first in everything we do. My confidence and our commitment emphatically continue today.
"WeWork made the proactive decision to commence a strategic reorganization process to best position the company for future success. Please note, this process is not happening in your country and we expect there to be no changes to WeWork’s operations there.
"As our valued members, we want you to hear directly from us that: â¯WeWork is here to stay. Our spaces are open and operational, and our team is here to serve you. Throughout this process, WeWork spaces will continue to be operated to the highest standard. Our members are our top priority."
But what does it mean for WeWork offices in the UK?
Why are WeWork filing for bankruptcy?
Based on its latest share price, WeWork, founded in 2010, is now worth less than $50m.
The group say they are currently running on a loss and has billions of dollars in liabilities.
In a statement late on Monday, November 6, the firm said that bankruptcy protection would allow it to "further rationalise its commercial office lease portfolio" while trying to ensure continuity for its users and allowing the firm to ultimately continue running.
Are any WeWork London locations closing?
In the statement, the CEO said that the firm "expect there to be no changes to WeWork’s operations" in the UK but other reports seem to point towards some sites facing closure.
There have been reports that WeWork Blackfriars on London’s Southbank will soon close, as members based there have received an email telling them the company was closing “unprofitable” sites. They told the BBC they had been asked to leave the building by 30 November.
What happens next?
A British rival to WeWork today said it was eyeing the bankrupt business’s portfolio for acquisition opportunities after it posted a boost in sales.
London-listed IWG, which operates the Regus and Spaces brands of commercial offices, said it had already acquired some sites from WeWork and was on the lookout to snap up more deals. Today it reported a 10% growth in revenues to £2.2 billion for the first nine months of the year.
CEO Mark Dixon said WeWork’s downfall would attract more customers to IWG as any restructuring would likely result in higher rents for customers to pay off its steep debts.
“Part of their problem is that they have not been pricing to make a margin, in fact they have been pricing in some cases to lose money,” he told investors. Them pricing normally to make a margin would be helpful [to us].
“Clearly, there will be some customers that will avoid using them because they will be closing quite a few centres and that’s a difficulty if you’re thinking about putting people into space.
“We’ve picked a few centres up last week, pre-filing, we’ll no doubt pick up some more in the coming weeks and months.”
