The WeWork logo is displayed outside a shared office building in Los Angeles, California on August 8, 2023. Embattled office-sharing company WeWork warned U.S. regulators on August 8 that it was concerned about its survival. Citing financial losses, cash needs and a decline in membership, WeWork said in a filing with the Securities and Exchange Commission (SEC) that there is “substantial doubt about the Company’s ability to continue as a going concern.” (Photo by Patrick T. Fallon / AFP) (Photo by PATRICK T. FALLON/AFP via Getty Images)
Patrick T. Fallon | Afp | Getty Images
Office-sharing company WeWork filed for Chapter 11 bankruptcy protection in New Jersey federal court on Monday, saying it has reached agreements with the vast majority of its secured bondholders and intends to cut “non-operating” leases.
The bankruptcy filing is limited to WeWork’s locations in the United States and Canada, the company said in a press release. The company reported liabilities ranging from $10 billion to $50 billion, according to a bankruptcy filing.
“I am deeply grateful for the support of our financial stakeholders as we work together to strengthen our capital structure and accelerate this process through the restructuring support agreement,” WeWork CEO David Tolley said in a press release. “We remain committed to investing in our products, services and world-class team of employees to support our community.
WeWork has suffered one of the most spectacular corporate collapses in recent US history in recent years. The company, valued at $47 billion in a 2019 round led by Masayoshi Son’s SoftBank, tried to go public five years ago but failed.
The pandemic caused additional pain as many businesses abruptly ended their leases and the ensuing economic downturn caused even more customers to close their doors.
In a regulatory filing in August, the company said bankruptcy could be a concern.
WeWork started 2021 as a special purpose acquisition company, but has since lost about 98% of its value. The company announced a 1-for40 reverse stock split in mid-August to bring shares trading back above $1, a requirement for maintaining a listing on the New York Stock Exchange.
Shares of WeWork had fallen to a low of about 10 cents and were trading at about 83 cents before the stock was halted on Monday.
Former CEO and co-founder Adam Neumann said the filing was “disappointing.”
“Since 2019, it has been challenging for me to watch from the sidelines as WeWork has failed to capitalize on a product that is more relevant today than ever before,” Neumann said in a statement to CNBC. “I believe that with the right strategy and the right team, WeWork can emerge successfully through a reorganization.”
As recently as September, the company said it had been actively renegotiating leases and was “here to stay.” The company had nearly $16 billion in long-term lease obligations, according to securities filings.
According to regulatory filings, the company leases millions of dollars in office space in 777 locations around the world.
WeWork has hired Kirkland & Ellis and Cole Schotz as legal counsel. PJT Partners will serve as investment bank with support from C Street Advisory Group and Alvarez & Marsal.
This is breaking news. Please check back for updates.
CNBC’s Ari Levy contributed to this report.
Source : www.cnbc.com