The co-working flex space provider WeWork Inc. (NYSE: WE) filed for chapter 11 protection in the U.S. Bankruptcy Court in New Jersey.
Founded in 2010, WeWork was valued at $47 billion during its peak operating years. However, the company had a history of financial missteps, including a disastrous initial public offering in 2019 that resulted in co-founder and CEO Adam Neumann resigning from his leadership role. The Covid-19 pandemic and the post-pandemic continuation of work-from-home practices saw the company’s business model fray further – by June, its losses totaled approximately $16 billion.
In announcing its bankruptcy filing, the company issued a statement pledging that it was working with “a deliberate and value maximizing lease rejection plan that is expected to position the company for operational and financial success.” The company also sought “the ability to reject the leases of certain locations, which are largely non-operational.”
The Wall Street Journal reported the company owes nearly $100 million in unpaid rent and lease termination fees to multiple property owners. WeWork locations outside of the U.S. and Canada will not be impacted by the bankruptcy filing.
David Tolley, CEO of WeWork, added, “Now is the time for us to pull the future forward by aggressively addressing our legacy leases and dramatically improving our balance sheet.”
Photo by Focal Foto / Flickr Creative Commons
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It appears WeWork selected popular U.S. cities as core, revenue generating locations. Post pandemic and crime statistics in some of these cities make using WeWork unpopular.