The WeWork logo is displayed outside a shared commercial office building in Los Angeles, California, August 8, 2023. On August 8, struggling office sharing company WeWork warned U.S. regulators that she worried about her survival. Citing financial losses, liquidity needs and declining membership numbers, WeWork said in a filing with the Securities and Exchange Commission (SEC) that “there are substantial doubts about the ability of the company to continue its activities. (Photo by Patrick T. Fallon / AFP) (Photo by PATRICK T. FALLON/AFP via Getty Images)
Patrick T. Fallon | Afp | Getty Images
Office sharing company We work filed for Chapter 11 bankruptcy protection in New Jersey federal court on Monday, saying it has reached agreements with the vast majority of its secured noteholders and intends to reduce “non-operational” leases.
The bankruptcy filing is limited to WeWork locations in the United States and Canada, the company said in a press release. WeWork reported liabilities ranging from $10 billion to $50 billion, according to an initial filing.
“I am deeply grateful for the support of our financial stakeholders as we work together to strengthen our capital structure and accelerate this process through the Restructuring Support Agreement,” said David Tolley, CEO of WeWork, in a Press release. “We remain committed to investing in our world-class products, services and team of employees to support our community.
WeWork has suffered one of the most spectacular corporate collapses in recent U.S. history in recent years. Valued in 2019 at $47 billion during a funding round led by Masayoshi Son’s SoftBank, the company unsuccessfully attempted to go public five years ago.
The Covid pandemic further compounded the difficulties, as many businesses abruptly ended their leases and the ensuing economic crisis led to even more clients closing their doors.
It revealed in an August regulatory filing that bankruptcy could be a problem.
WeWork got its start via a special purpose acquisition company in 2021 but has since lost around 98% of its value. The company in mid-August announcement a 1-for-40 reverse stock split to get its shares trading above $1 again, a condition of maintaining its listing on the New York Stock Exchange.
WeWork shares had fallen to a low of about 10 cents and were trading at about 83 cents before trading stopped Monday.
Former co-founder and CEO Adam Neumann said the filing was “disappointing.”
Adam Neumann, CEO of WeWork.
Eduardo Munoz | Reuters
“It’s been a challenge for me to watch from the sidelines since 2019, as WeWork has failed to capitalize on a product that is more relevant today than ever,” Neumann said in a statement to CNBC. “I believe that with the right strategy and team, a reorganization will allow WeWork to emerge successfully.”
As recently as September, the company said it had been actively renegotiate leases and that he was “here to stay”. The WeWork company had nearly $16 billion in long-term lease obligations, according to securities filings.
The company leases millions of square feet of office space in 777 locations around the world, according to its regulatory filings.
WeWork has hired Kirkland & Ellis and Cole Schotz as legal advisors. PJT Partners will serve as its investment bank, with support from C Street Advisory Group and Alvarez & Marsal.
— CNBC’s Ari Levy contributed to this report.
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