The office rental company WeWork has filed for bankruptcy in the United States through a so-called Chapter 11 procedure. WeWork also reports almost 18 billion euros in debt. The company was hit during the corona pandemic, from which the initially promising start-up has not recovered.
WeWork says it has reached a restructuring agreement with its creditors, which represents about 92 percent of its secured loans. Assets worth 14 billion euros were also reported in the bankruptcy filing Bloomberg. The Chapter 11 procedure does not apply to branches outside the United States, according to WeWork, which also has two branches in Brussels. The branches outside the US will continue to operate.
Bankruptcy is often the only option for faltering companies with costly leases, because U.S. law allows cash-strapped companies to shed onerous contracts that are otherwise difficult to cancel. “WeWork is requesting the opportunity to reject the leases of certain locations, which are largely non-operational. All affected members have received advance notice,” the statement said.
Largest in Manhattan
WeWork’s bankruptcy ends a years-long saga for the New York company, which was once the largest office rental company in Manhattan. His sudden rise and rapid fall have kept both Wall Street and Silicon Valley busy.
The company’s decline probably started in 2019. WeWork was then valued by investors at 44 billion euros. In a matter of months, the company went from planning an IPO to laying off thousands of employees and obtaining a multi-billion dollar bailout.
The office rental company only really started to struggle during the corona pandemic, when employees changed their working habits and opted for teleworking. WeWork’s competitors, such as Knotel and IWG subsidiaries, filed for bankruptcy in 2021 and 2020, respectively.
The company went public two years later than planned, in 2021, thanks to a partnership with a special purpose acquisition company (SPAC). This is a company whose sole purpose is to take a private company public without the usual procedure of an IPO.
Although WeWork announced a major debt restructuring in early 2023, it quickly fell into trouble again. In August, the company said there was “significant doubt” about its ability to continue operating. Weeks later, it said it would renegotiate almost all of its leases and withdraw from “underperforming” locations.
WeWork’s real estate seizures spanned 777 locations in 39 countries through June 30. It has recently experienced occupancy rates close to 2019 levels, but the business remains unprofitable.
WeWork never experienced normal business. For a significant portion of its existence, it operated with the stated mission of “elevating the consciousness of the world.” Founder Adam Neumann and his wife, executive director and co-founder Rebekah Neumann, were deeply involved in spirituality at times, making the company at times more like a religion than a startup.