- WeWork, the office-sharing company, has filed for Chapter 11 bankruptcy.
- The company was valued at $47 billion in 2019.
- WeWork reported liabilities ranging from $10 billion to $50 billion.
WeWork, the office-sharing company, has officially filed for Chapter 11 bankruptcy after being valued at $47 billion just four years ago.
The company filed for bankruptcy protection in a New Jersey federal court on Monday, claiming they had entered into agreements with the vast majority of its secured note holders and it wanted to get rid of “non-operational” leases.
“I am deeply grateful for the support of our financial stakeholders as we work together to strengthen our capital structure and expedite this process through the Restructuring Support Agreement,” WeWork CEO David Tolley said in a press release.
“We remain committed to investing in our products, services, and world-class team of employees to support our community.
“As part of today’s filing, WeWork is requesting the ability to reject the leases of certain locations, which are largely non-operational and all affected members have received advanced notice,” said Tolley in a statement.
This comes after WeWork was once valued at $47 billion in 2019. The company reportedly attempted, but failed, to go public five years ago due to investors balking at high debt levels, prompting massive losses and running through cash at an alarming rate.
In an attempt to keep its New York Stock Exchange listing, the company announced a 1-for-40 reverse stock split in August in order to get its shares trading back above $1.
Former CEO and co-founder, Adam Neumann, expressed that the filing was “disappointing” in a statement to the press.
“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,” Neumann said in a statement to CNBC.
“I believe that, with the right strategy and team, a reorganization will enable WeWork to emerge successfully.”
In September, WeWork said it was actively re-negotiating leases and that it was “here to stay.”
The company had a staggering $16 billion in long-term lease obligations, according to its securities filings. Currently, the office-sharing group leases millions of square feet of office space in 777 locations around the world.
WeWork’s bankruptcy filing comes as no surprise after its meteoric rise and subsequent fall from grace.
The company’s valuation of $47 billion in 2019 was clearly overinflated, leading to its inability to go public and mounting debt.
Former CEO Adam Neumann’s disappointment is understandable, but the reality is that WeWork failed to adapt and capitalize on its product in a changing market.
The bankruptcy filing allows the company to shed non-operational leases and restructure, potentially enabling a successful emergence.
However, it serves as a cautionary tale for investors and businesses to exercise caution and adapt quickly in a rapidly evolving industry.
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