Technology

WeWork forced to file for bankruptcy in the US

Listen to this Article Now
Getting your Trinity Audio player ready...
Spread the love

By Annabelle Liang and Natalie Sherman

Business reporters

WeWork, the shared office firm that was once valued at $47bn (£38bn), has been forced to file for bankruptcy in the US.

The decision follows the meteoric rise – and fall – of a company which was once seen as the future of the workplace.

WeWork’s filing will give it protection from its creditors and landlords as it restructures its vast debts.

Based on its latest share price, WeWork is now worth less than $50m.

ADVERTISEMENT

The bankruptcy will affect the company’s business in the US and Canada. It said its spaces remained open and operational, including in the UK. It has more than 700 sites around the world and about 730,000 members.

WeWork, which is loss-making, has billions of dollars in liabilities and, in a statement, said that bankruptcy protection will allow it to “further rationalise its commercial office lease portfolio while focusing on business continuity”.

David Tolley, WeWork’s chief executive, 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”.

WeWork, which was founded in 2010 and was led by the colourful Adam Neumann, leases office spaces where individuals and companies can rent and share space. It became known for offering beer on tap in its offices as well as colourful and relaxed decor.

Demand for the firm’s co-sharing office spaces was hit after a disastrous 2019 effort to raise money in a public listing that hurt its reputation and led to the ousting of Mr Neumann.

That was swiftly followed by the pandemic which led to many office closures around the world, with people having to work from home.

In the first half of this year, WeWork lost more than $1bn, weighed down by the expense of operating its offices, as well as other costs.

The company has been scrambling to sell off parts of its business and pushing to shut locations or renegotiate the terms of long-term leases and debts.

IMAGE SOURCE,GETTY IMAGES

Image caption,

WeWork co-founder and boss Adam Neumann was ousted from the firm

Last month, as those discussions intensified, WeWork told investors it was not making payments on its loans.

Major shareholder SoftBank, a Japanese technology conglomerate, has pumped tens of billions of dollars into WeWork as it continued to lose money.

As anticipation of a bankruptcy filing emerged, Mr Neumann said the fall of WeWork 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,” Mr Neumann said.

“I believe that, with the right strategy and team, a reorganisation will enable WeWork to emerge successfully,” he added.

source: BBC