Office leasing company WeWork has filed for bankruptcy in the United States through so-called Chapter 11 proceedings. WeWork also reports debts of about 18 billion euros. The company took a hit during the Corona pandemic, from which the initially promising startup never recovered.
WeWork says it has reached a restructuring agreement with its creditors, which represent about 92 percent of its secured loans. Assets worth €14 billion were also reported in the bankruptcy filing Bloomberg. The Chapter 11 procedure does not apply to branches outside the United States, according to WeWork, which also has two branches in Brussels. Branches outside the United States will continue to operate.
Bankruptcy is often the only option for distressed companies with expensive leases, because U.S. law allows cash-strapped companies to escape burdensome contracts that are difficult to cancel. “WeWork is requesting the opportunity to reject leases for certain locations, which are largely non-operating. All affected members received advance notice,” the statement said.
The largest in Manhattan
WeWork’s bankruptcy ended a years-long saga for the New York company, which was once the largest office leasing company in Manhattan. His sudden rise and rapid fall have kept Wall Street and Silicon Valley busy.
The company’s decline may have begun in 2019. WeWork was then valued by investors at 44 billion euros. Within months, the company went from planning an IPO to laying off thousands of employees and receiving a multibillion-dollar bailout.
The office leasing company really began to struggle during the coronavirus pandemic, when employees changed their work habits and chose to work remotely. WeWork’s competitors, such as subsidiaries Knotel and IWG, filed for bankruptcy in 2021 and 2020, respectively.
The company went public two years later than scheduled, in 2021, thanks to a partnership with A Special purpose acquisition company (plumber). This is a company whose sole purpose is to take a private company public without the usual procedure of going public.
Although WeWork announced a major debt restructuring in early 2023, it quickly ran into trouble again. In August, the company said there were “significant doubts” about its ability to continue operating. Weeks later, it said it would renegotiate nearly all leases and withdraw from “underperforming” locations.
WeWork’s property seizures spanned 777 locations in 39 countries as of June 30. It has recently seen occupancy rates approaching 2019 levels, but the business remains unprofitable.
WeWork has never seen business as usual. For much of its existence, it has operated by the stated mission of “raising the consciousness of the world.” Founder Adam Newman and his wife, CEO and co-founder Rebecca Newman, were deeply involved in spirituality at times, making the company at times more like a religion than a startup.
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