Michelle ThompsonThe company never bounced back from the remote work revolution and the departure of founder Adam Neumann in 2019.
According to a business statement, WeWork filed for chapter 11 bankruptcy in New Jersey on Monday.
The troubled business, which was formerly valued at $47 billion on the private market, saw a 98% drop in share price this year, resulting in a market valuation of less than $50 million. It faced $2.9 billion in net long-term debt and more than $13 billion in long-term leases in August, and it expressed “substantial doubt” about its ability to continue operating. In a statement, the business said that it had signed a restructuring support agreement and that it would “dramatically improve our balance sheet and address our legacy leases” in order to pay off the debt.
The company’s executives also declared that the majority of WeWorks would continue to operate as usual.
WeWork said in a statement, “WeWork spaces remain open and operational and we will continue to provide our members with the exceptional experience they have come to expect.” “WeWork is here to stay, and as we move forward, we intend to stay in the great majority of buildings.”
WeWork’s stock was put on hold on Monday as Wall Street prepared for the business to declare bankruptcy in response to rumors that it was about to do so.
In order to significantly lower its current funded debt, the company said in a statement that it has entered into a restructuring support arrangement with stakeholders. WeWork will ask to be able to reject the leases of a few, mostly non-operational facilities in the submission.
WeWork CEO David Tolley stated, “We remain committed to investing in our world-class team of employees, products, and services to support our community.” “WeWork has a solid base, a thriving company, and a promising future.”
The company never fully recovered from the departure of its founder, Adam Neumann, who left in September 2019 in the midst of the coronavirus pandemic-related remote work revolution and a push to go public.
A candid prospectus that questioned the company’s long-term survival, profitability, and leadership was filed with the Securities and Exchange Commission as part of the company’s attempt to list as the We Company on the New York Stock Exchange in 2019. The business would wait until 2021 to go public. Upon leaving, Neumann was given a $445 million settlement deal.
Neumann released a statement prior to the bankruptcy filing, saying, “The company’s anticipated bankruptcy filing is disappointing.” Since 2019, I have found it difficult to stand by and watch as WeWork has failed to capitalize on a product that is more relevant than ever. I think that WeWork can effectively emerge from a reorganization if the correct people and strategy are in place.
The company, which was established in 2010, leases long-term office space and sells offices that cater to co-working spaces short-term memberships. After receiving a $12.8 billion investment, mostly from the Japanese multinational SoftBank, the company was once valued at $47 billion. But once the S-1 prospectus was released, analysts estimated the company’s valuation to be $10 billion.
When remote working began to take over co-working, WeWork closed down several of its co-working locations in reaction to lockdowns caused by pandemics.
However, as of June, it still had a sizable portfolio of commercial real estate, with over 777 properties spread across 39 nations. 906,000 desks were stored in these, the business said. (WeWork leases space to Guardian US.)
WeWork scrambled to adjust to a post-Covid world, attempting to establish itself as an expert supplier of flexible workspace as companies and their workers considered where and how to work. Still, it was losing a lot of money; in the first half of this year alone, it lost $696 million.
Neumann, 44, has already launched a fresh business. Flow is a residential real estate startup that raised $350 million last year from Silicon Valley venture capital firm Andreessen Horowitz.
Emily Martinez
