The WeWork emblem is exhibited outside a mutual commercial office space building on August 8, 2023 in Los Angeles, California. Distressed office-sharing firm WeWork cautioned US regulators on August 8 that it is concerned about its survival. Mentioning financial deficits, cash requisites, and dwindling membership, WeWork articulated in a filing with the Securities and Exchange Commission (SEC) that “substantial skepticism exists about the company’s capability to continue as a going concern.” ” (Photo by Patrick T. Fallon/AFP) (Photo by Patrick T. Fallon/AFP via Getty Images)Thank you for reading this post, don't forget to subscribe!
Patrick T. Fallon | AFP | getty images
Office-sharing corporation WeWork filed for Chapter 11 bankruptcy defense in New Jersey federal court on Monday, asserting that it had participated in commitments with the overwhelming majority of its safeguarded note holders and that it aimed to dissolve “non-operating” leases. Was to reduce.
The insolvency submission is restricted to WeWork locations in the US and Canada, the corporation specified in a press release. According to the insolvency submission, the corporation uncovered obligations fluctuating from $10 billion to $50 billion.
WeWork CEO David Tolley mentioned in a press release, “I am extremely appreciative for the support of our financial stakeholders as we work together to enhance our capital structure and expedite this process through the Restructuring Support Agreement ” “We are committed to investing in our products, services, and exceptional team of employees to bolster our community.
Over the previous several years, WeWork has endured one of the most dramatic corporate collapses in recent American history. Valued at $47 billion in 2019 under Masayoshi Sons’ domination of SoftBank, the corporation endeavored and failed to go public five years ago.
The pandemic inflicted further adversity as numerous companies abruptly terminated their leases, and the ensuing economic downturn caused even more patrons to shut their doors.
In an August regulatory filing, it exposed that insolvency could pose a concern.
WeWork made its debut in 2021 through a special purpose acquisition company, but its value has dwindled about 98% since then. The corporation declared a 1-for-40 reverse stock split in mid-August to sustain its shares trading above $1, a prerequisite to preserve a listing on the New York Stock Exchange.
WeWork shares plummeted to a minimum of about 10 cents and were trading at about 83 cents before the stock ceased on Monday.
Former CEO and co-founder Adam Neumann deemed the submission “disheartening”.
“It has been arduous for me to witness from the sidelines since 2019 as WeWork neglected to take advantage of a product that is more pertinent today than ever before,” Neumann expressed in a statement to CNBC. “I am convinced that, with the appropriate strategy and team, a restructuring will enable WeWork to emerge triumphantly.”
As recently as September, the corporation stated that it was actively renegotiating leases and that it was “here to stay.” According to securities filings, the corporation had about $16 billion in long-term lease obligations.
According to regulatory filings, the corporation leases millions of square feet of office space in 777 locations across the globe.
WeWork has appointed Kirkland & Ellis and Cole Shotz as legal consultants. PJT Partners will serve as its investment bank with support from C Street Advisory Group and Alvarez & Marsal.
This is breaking news. Please check back for updates.
CNBC’s Ari Levy contributed to this account.