WeWork makes it official, filing for bankruptcy protection in the US
WeWork, the co-working giant once hailed as the future of the office, formally filed for Chapter 11 bankruptcy in the US last night.
Softbank – which has pumped billions into WeWork and remains a 60 per cent owner – announced last night that more than nine in ten of its creditors had agreed to debt for equity swaps that it hopes will give the firm a new lease of life.
The deals will wipe out around $3bn of debt.
Locations outside the US and Canada will be unaffected by the announcement, WeWork said. WeWork is one of London’s biggest office tenants.
Co-founded by Adam Neumann, WeWork was the self-styled pioneer of the new flexible office movement, branding its spaces and throwing itself into the start-up and scale-up world.
However the downturn in office use post-pandemic revealed that at its heart the firm was a property company. Some 74 per cent of the firm’s costs went on leasing office space in the last quarter for which financial records are available.
Chapter 11 bankruptcy allows WeWork to restructure the firm.
“SoftBank will continue to act in the best long-term interests of our investors,” the Japanese company said in a statement published by Reuters.
The firm has been battling a substantial debt pile for quite some time and earlier this year flagged ongoing concerns and worries to investors.
Founding CEO Adam Neumann stepped away in 2019 just after a planned float was pulled after scrutiny of his leadership and the firm’s long-term finances.
A delayed IPO has not been successful – shares have tanked more than 98 per cent from the offer price.