WeWork, once valued privately at $47bn and seen as future of workplace, files for bankruptcy in US amidst heavy losses
Shared office start-up WeWork has been forced to file for bankruptcy protection in the US, in the latest drama for a company that was once valued at $47 billion (£38bn) and was seen as the future of work.
The company has been hit by a combination of high costs from the expensive leases it took on in large numbers up to 2019, and a fall in occupancy since the Covid-19 pandemic as hybrid working has become popular.
WeWork said its office spaces remain open and operational and that it expects the bankruptcy to last for about seven months as it resructures its billions in debts.
It said it has come to an agreement with most of its creditors to convert $3bn of loans and bonds into equity in the reorganised firm, and that it is also restructuring its more than $13bn in lease obligations.
WeWork chief executive David Tolley told landlords in September that the company was looking to restructure nearly all its leases, saying it had accumulated an “inflexible and high-cost lease portfolio” as a result of a period of “unsustainable hypergrowth”.
As of early 2019, WeWork, led by charismatic co-founder Adam Neumann, was valued at $47bn in private markets and was leasing office space around the world as it prepared for an initial public offering.
Neumann pitched his company as a brand of the “we generation” and saw it having a mission to “elevate the world’s consciousness”.
But after it filed its IPO prospectus in August 2019 details of the company’s heavy spending and corporate governance concerns caused investors to think twice, leading to the IPO’s cancellation and Neumann’s departure.
The firm went public in 2021 in a SPAC merger at a valuation of $9bn, but remains loss-making with a loss of more than $1bn in the first half of this year.
The company’s current market valuation is less than $50m.
Meanwhile major shareholder SoftBank has funded WeWork to the tune of tens of billions of dollars as it continued to lose money.
Tolley said he was “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”.
In a statement Neumann said the bankruptcy was “disappointing”.
“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,” he said.
“I believe that, with the right strategy and team, a reorganisation will enable WeWork to emerge successfully,” he added.