The company has struggled to recover from Covid-19 lockdowns and the global shift to remote working, as its share price has dropped by more than 98pc this year.
WeWork, once an extremely valuable start-up worth $47bn, is filing for bankruptcy in the US to sort out its struggling finances.
The company has entered into a Restructuring Support Agreement with lenders that represents roughly 92pc of its secured notes to reduce its funded debt. A WeWork spokesperson told Sky News that this will wipe out roughly $3bn of its debt.
WeWork said it has filed for protection under Chapter 11 of the US Bankruptcy Code and intends to file recognition proceedings in Canada under the Companies’ Creditors Arrangement Act.
In a statement, the co-working giant said it aims to “drastically reduce” its debt and restructure the company through these actions. WeWork claims its locations outside of the US and Canada are not affected by this process.
The company is also requesting to reject the leases of certain locations which are “largely non-operational”. WeWork said affected members have received advanced notice of this plan.
WeWork CEO David Tolley said the company is “aggressively addressing our legacy issues” and moving to improve its balance sheet. The Guardian reports that WeWork had $2.9bn in net long-term debt and more than $13bn in long-term leases in August.
“We defined a new category of working, and these steps will enable us to remain the global leader in flexible work,” Tolley said. “I am 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.”
What happened to WeWork?
Founded in 2010, WeWork rose to have a vast real estate portfolio and a valuation of $47bn at its peak. But the company’s first attempt to go public in 2019 was abandoned over concerns around the control and leadership of former CEO and co-founder Adam Neumann.
After that, a period of Covid-19 lockdowns, social distancing and the rise of remote working all had a profound effect on the office space provider’s operations, and it didn’t go public until 2021.
WeWork’s share price has plummeted by more than 98pc this year. The company still has hundreds of locations worldwide, including a co-working space in Dublin.
Neumann has since shifted his attention to a new venture called Flow, which is a blockchain-based carbon credit platform that aims to disrupt the rental real estate market. Flow secured $350m from Andreessen Horowitz last year.
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