WeWork filed for chapter 11 bankruptcy on Monday in New Jersey, according to a statement from the company.
The beleaguered company, once valued at $47bn on the private market, endured a 98% decline in its share price this year, leaving it with a market capitalization of less than $50m. In August, it raised “substantial doubt” that it could continue to operate as it grappled with $2.9bn in net long-term debt and more than $13bn in long-term leases. The company said in a statement it had entered into a restructuring support agreement and would deal with the debt by “addressing our legacy leases and dramatically improving our balance sheet”.
Company leadership also asserted that most WeWorks would remain open for the foreseeable future.
“WeWork spaces remain open and operational and we will continue to provide our members with the exceptional experience they have come to expect,” WeWork’s statement reads. “WeWork is here to stay and we plan to remain in the vast majority of buildings as we move into the future.”
Shares in WeWork were suspended on Monday as Wall Street braced for the company to file for bankruptcy, following reports that it was planning to do so.
According to the company’s statement, it has entered a restructuring support agreement with stakeholders to drastically reduce its existing funded debt. As part of the filing, WeWork will request the ability to reject the leases of certain, largely non-operational, locations.
“We remain committed to investing in our products, services and world-class team of employees to support our community,” said David Tolley, CEO of WeWork. “WeWork has a strong foundation, a dynamic business and a bright future.”
The business never quite recovered from the ouster of its founder, Adam Neumann, who resigned in September 2019 amid a push to go public, and the remote work revolution of the coronavirus pandemic.
The attempt to list the company on the New York Stock Exchange as the We Company in 2019 included the filing of a revealing prospectus with the Securities and Exchange Commission that raised questions over its long-term viability, profitability and leadership. The company would not go public until 2021. Neumann received a $445m payout package on his exit.
Before the bankruptcy filing, Neumann issued a statement: “The company’s anticipated bankruptcy filing is disappointing. It has been challenging for me to watch from the sidelines since 2019 as WeWork has failed to take advantage of a product that is more relevant today than ever before. I believe that, with the right strategy and team, a reorganization will enable WeWork to emerge successfully.”
Founded in 2010, the company’s business involves taking long-term leases on office buildings and selling short-term memberships to offices geared towards co-working. The company was once valued at $47bn on an investment of $12.8bn, primarily from the Japanese multinational SoftBank. After the publication of its S-1 prospectus, however, analysts valued the company at $10bn.
WeWork shuttered dozens of its co-working spaces in response to pandemic lockdowns, when remote working came to dominate co-working.
Its commercial real estate portfolio remains vast, however, with about 777 locations across 39 countries as of June. These housed 906,000 desks, according to the company. (Guardian US leases space from WeWork.)
WeWork raced to adapt to a post-Covid world, seeking to position itself as a specialist provider of flexible office space as businesses and their employees weighed how, and where, to work. It remained deep in the red, however, and lost $696m in the first half of this year.
Neumann, 44, has already started a new venture. Flow, which raised $350m from the Silicon Valley venture capital firm Andreessen Horowitz last year, is focused on residential real estate.
