New York City — Coworking and office-sharing pioneer WeWork Inc. (NYSE: WE) has filed for Chapter 11 bankruptcy protection. WeWork also plans to file similar protectionary measures in Canada.
WeWork has entered into a restructuring support agreement with its creditors representing approximately 92 percent of its secured notes to “drastically reduce” the company’s existing funded debt and expedite the restructuring process. Reuters reports the debt-for-equity swap deal with its creditors totals $3 billion.
The New York City-based company plans to continue operations and “further rationalize its commercial office lease portfolio” with its network of office landlords. WeWork’s locations and franchisees outside of the United States and Canada are not part of this process. According to the company website, WeWork operates more than 320 locations globally across various workplace solutions platforms.
As part of the filing, WeWork is requesting the ability to reject the leases of certain locations that are “non-operational,” all of which have affected members that have received advanced notice. The company has retained Hilco Real Estate, an Illinois-based real estate restructuring and advisory firm, to assist with lease renegotiations.
“WeWork has a strong foundation, a dynamic business and a bright future,” says David Tolley, CEO of WeWork. “Now is the time for us to pull the future forward by aggressively addressing our legacy leases and dramatically improving our balance sheet.”
WeWork plans to continue servicing its existing members, vendors, partners and other stakeholders in the ordinary course of business. The company has filed for customary first-day motions that are expected to be approved by the court.
Founded in 2010, the beleaguered company was once valued at $47 billion by majority investor SoftBank Group in 2019. Tokyo-based SoftBank currently owns approximately 71 percent of WeWork, according to Reuters.
In the process of becoming a publicly traded company in 2019, WeWork removed co-founder Adam Neumann and delayed its initial public offering (IPO) indefinitely. The company would eventually go public via a $9 billion SPAC merger with BowX Acquisition in 2021.
WeWork was a pioneer of the coworking movement that offered flexible workspaces ranging from single dedicated desks to full office accommodations in major office markets across the world. WeWork’s members range from single entrepreneurs to Fortune 500 companies seeking ancillary office space.
WeWork currently touts 2,500 employees, according to Tolley.
WeWork’s advisors during the bankruptcy process include legal counsel Kirkland & Ellis LLP and Cole Schotz PC (United States) and Goodmans LLP (Canada); investment banker PJT Partners LP; financial and restructuring advisor Alvarez & Marsal North America LLC; communications advisor C Street Advisory Group; and claims and noticing agent Epiq Corporate Restructuring LLC.
WeWork’s stock price closed on Monday, Nov. 6 at $0.83 per share, down from $110 a year ago. The stock reached a record high over $520.80 per share on Oct. 22, 2021.
— John Nelson