Co-working giant WeWork files for bankruptcy in US with liabilities ranging from $10 to $50 billion
WeWork files for bankruptcy in the United States with liabilities of $10 to $50 billion, marking the end of a tumultuous period for the co-working company.
Co-working giant WeWork has officially filed for bankruptcy in the United States, marking the culmination of a protracted period of challenges for the company. The filing, submitted to the New Jersey federal court, cites liabilities ranging from $10 to $50 billion (£40.5 billion). By seeking bankruptcy protection, WeWork gains legal safeguards against its creditors, providing a framework for negotiations with landlords and other parties.
WeWork, renowned for its flexible office rentals, once held promise as a revolutionary concept for the workplace. However, the company's rapid expansion strategy aimed at masking substantial costs.
WeWork's CEO, David Tolley, expressed appreciation for the support of the company's financial stakeholders, emphasizing a commitment to fortifying its financial structure and accelerating the restructuring process. Tolley reiterated the firm's dedication to investing in its offerings, services, and staff to bolster its community support.
"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 chief executive David Tolley said in a statement. "We remain committed to investing in our products, services, and world-class team of employees to support our community," he added.
The company faced a significant decline in demand for its office spaces following a failed attempt in 2019 to raise funds through a public offering, which impacted its reputation and led to the ousting of co-founder Adam Neumann. The subsequent pandemic-induced shift to remote work also severely impacted the demand for office spaces, resulting in numerous closures worldwide.
WeWork experienced substantial losses in the first half of the year, surpassing $1 billion. These losses were primarily due to the high operational costs of its offices, alongside additional financial burdens.
To mitigate the financial challenges, WeWork has been actively attempting to divest portions of its business and negotiate better terms for long-term leases and debts. Intensifying these efforts, the company conveyed to investors last month that it was unable to fulfill payments on its loans.
Established in 2010, WeWork boasted a global presence with over 700 locations and approximately 730,000 members as of June. The company had been valued at around $47 billion by private investors during its peak in early 2019.