Michelle ThompsonWeWork, the beleaguered company in the office-sharing industry, might potentially initiate the process of filing for bankruptcy within the upcoming week, as indicated by reports in the US media.
When the BBC reached out for a statement, WeWork declined to provide any comment.
This office-sharing company, once considered a frontrunner in the future of workspace solutions, has grappled with various issues over the years. These challenges include a disastrous attempt in 2019 to take its shares public and the departure of its co-founder. Additionally, the company suffered significant setbacks during the pandemic, with more people opting to work remotely.
Reports suggest that WeWork is contemplating the possibility of filing for bankruptcy in New Jersey, with the Wall Street Journal being the first to break the story, as confirmed by Reuters, citing an inside source.
In response to these reports, a spokesperson from WeWork stated, “We do not comment on speculation.” Earlier on Tuesday, the company informed the US financial regulator that it had reached an agreement with creditors to temporarily defer payments on some of its debts.
The consequences of these developments were evident in the after-hours trading in New York, where WeWork shares plummeted by more than 40%.
The New York-based company has faced ongoing difficulties since its initial attempt to go public in 2019 failed, primarily due to concerns about its debts, financial losses, and management issues.
In the lead-up to confirming the cancellation of its stock sale, WeWork’s founder, Adam Neumann, stepped down from his role as CEO. The company cited that the intense scrutiny of his leadership had become a significant distraction.
Shortly after the stock listing debacle, the COVID-19 pandemic emerged, triggering a widespread shift to remote work and subjecting WeWork to harsh public criticism from tenants seeking to terminate their leases.
Nevertheless, WeWork continued its operations, with executives divesting non-core businesses, reducing the workforce, and modifying or canceling numerous leases in an effort to mitigate the company’s losses and avoid running out of funds.
WeWork eventually made its way to the New York Stock Exchange in 2021, albeit with a significantly lower valuation.
SoftBank, the Japanese conglomerate, injected billions of dollars into WeWork as the company consistently incurred losses. At its peak in early 2019, WeWork had an estimated valuation of approximately $47 billion but saw nearly a 98% decline in its stock market value over the past year.
In August, WeWork expressed “substantial doubt” about its ability to sustain its operations. The company mentioned challenges related to decreased demand and a challenging operational environment in its statement.
Additionally, WeWork experienced the departure of several top executives throughout the year, including CEO and Chairman Sandeep Mathrani.
As of the end of June, WeWork maintained 777 locations across 39 countries around the world, according to the company’s information.
