WeWork Files for Chapter 11 Bankruptcy Protection Amid Financial Struggles
Office-sharing giant WeWork has filed for Chapter 11 bankruptcy protection in New Jersey federal court, as it faces mounting financial challenges and a drop in memberships. The company, which operates in the U.S. and Canada, revealed liabilities ranging from $10 billion to $50 billion in its bankruptcy filing.
WeWork’s decision to file for bankruptcy comes after it warned U.S. regulators earlier this year about doubts regarding its ability to survive. The company cited financial losses, cash needs, and a decline in memberships as key concerns that raised doubts about its ability to continue as a going concern.
In a press release, WeWork CEO David Tolley expressed gratitude for the support of the company’s financial stakeholders, stating, “We remain committed to investing in our products, services, and world-class team of employees to support our community.” Tolley also emphasized the company’s efforts to strengthen its capital structure and expedite the restructuring process.
WeWork’s downfall began a few years ago, marked by one of the most remarkable corporate collapses in recent U.S. history. Despite being valued at $47 billion in 2019, the company’s failed attempt to go public five years ago was followed by further challenges during the pandemic. Many companies abruptly terminated their leases, while the subsequent economic slump led to even more clients closing their doors.
The company’s shares, which had already lost about 98% of their value, experienced an additional blow with a reverse stock split. WeWork’s shares had fallen to a low of approximately 10 cents and were trading at around 83 cents before trading was halted on Monday.
Adam Neumann, WeWork’s former CEO and co-founder, expressed disappointment over the filing. However, Neumann believes that with the right strategy and team, a successful reorganization could enable WeWork to emerge stronger.
As recently as September, the company had stated that it was actively renegotiating leases and was “here to stay.” WeWork leases millions of square feet of office space in 777 locations worldwide, according to its regulatory filings.
WeWork has enlisted the services of Kirkland & Ellis and Cole Schotz as its legal advisors, while PJT Partners will serve as its investment bank, supported by C Street Advisory Group and Alvarez & Marsal.
This news is developing, and updates will be provided as they become available.
Note: CNBC’s Ari Levy contributed to this report.