November 7, 2023
Today at
07:23
The fallen icon of the coworking industry has filed for protection from his creditors. They see most of their progress go up in smoke.
WeWork
announced that it had closed its books on Monday evening after it became apparent that it was unable to attract more users to its coworking offices. By filing for protection from its creditors, WeWork hopes to get court approval for a debt restructuring that would convert another $3 billion in debt into virtually worthless stock.
The last investors in WeWork have long since thrown in the towel. The company, which was valued at $27.5 billion two years ago, was still worth $44.5 million on Wall Street on Monday evening. The share has lost 99 percent of its market value since the beginning of this year.
WeWork’s demise had been predicted for some time because its business model was unsustainable. WeWork rents offices on the long term and refurbishes them into trendy coworking spaces to rent to customers on the short term. The Covid pandemic, which caused demand for workspaces to collapse, created cracks in the model. High interest rates and the urge to save in the start-up world – an important market of WeWork – did not make the situation any better.
The company had already warned in August that its survival was not guaranteed and that it might seek legal protection. It is another blow to the troubled Japanese investor Softbank, which has pumped billions into the company.
WeWork was founded in 2010 by Adam Neumann and Miguel McKelvey. In the first years, the company experienced rapid growth in New York, before expanding in the rest of the US and other countries. The American company also opened a few locations in our country, but stopped that expansion at the end of 2019. In 2019, Softbank left Neumann out, but he did receive a separation bonus of $1.7 billion.
WeWork currently has 777 offices in 39 countries. The legal proceedings also make it possible for WeWork to get out of long-term lease contracts in the US.
