Topline
WeWork, which provides coworking spaces, filed for Chapter 11 bankruptcy on Monday, capping off a dramatic collapse for a company once valued at $47 billion.
Signage for shared office giant WeWork is seen outside a building in Seoul.
Key Facts
In a press release, WeWork said 92% of its secured debt holders had agreed to its restructuring plan that will wipe out around $3 billion of debt.
As part of the reorganization, the company will cut down on its commercial office leases.
In its filing with the New Jersey bankruptcy court, WeWork disclosed it holds around $15 billion in assets and $18.6 billion in debts.
The company’s filing also showed it owes around $100 million in lease termination fees and unpaid rent—although it intends to dispute some of those claims.
Big Number
$44.5 million. That was the company’s valuation when markets closed on Friday, with WeWork’s stock price down to 83 cents. The company’s stock has fallen 98.5% since the start of the year and more than 99% since it went public through a SPAC merger in 2021.
Crucial Quote
In a statement Monday, WeWork co-founder Adam Neumann called the company’s bankruptcy filing “disappointing.” He added: “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. I believe that, with the right strategy and team, a reorganization will enable WeWork to emerge successfully.”
Key Background
The coworking space rental company, backed by SoftBank’s Vision Fund, was once valued at $47 billion—making it one of the most valuable startups in the world. However, the company’s fortunes took a turn for the worse as it prepared to go public in 2019. In its IPO filing that year, the startup disclosed it had lost $1.9 billion in the preceding twelve months. This was followed by a Wall Street Journal investigative report about the company’s then-CEO Adam Neumann’s controversial management style. Neumann left WeWork later that year as the company was bailed out by SoftBank. Following its takeover, SoftBank progressively slashed the valuation of the company as its financial situation was made worse by the Covid-19 pandemic when people were forced to work from home. The company eventually went public through a SPAC merger in 2021.
Further Reading
WeWork Files for Bankruptcy Amid Glut of Empty Offices (New York Times)
How Adam Neumann’s Over-the-Top Style Built WeWork. ‘This Is Not the Way Everybody Behaves.’ (Wall Street Journal)
