WeWork, among the top co-working giants, has officially filed for bankruptcy as it struggles to solve its debt issues and faces monetary hurdles. As per a statement released by the New York-based company, it has announced a restructuring agreement with creditors holding approximately 92 percent of its secured notes. This agreement entails the consolidation of its office space rental portfolio as per a report by Reuters.
The SoftBank Group owns a majority stake in the company. Despite its 2019 valuation of $47 billion in a round led by SoftBank's Masayoshi Son, the company's attempts to go public five years ago proved unsuccessful.
WeWork continued to face profitability challenges owing to costly leases and corporate clients canceling their contracts, particularly as more employees adopt remote work. In the second quarter of 2023, space expenses accounted for 74 per cent of WeWork's revenue.
According to a bankruptcy filing, the company disclosed estimated assets and liabilities within the range of $10 billion to $50 billion.
The company, under the leadership of its founder Adam Neumann, achieved the status of being the most valuable U.S. startup with a valuation of $47 billion. It garnered investments from prominent investors such as SoftBank and venture capital firm Benchmark, as well as the support of major Wall Street banks, including JPMorgan Chase.
Following an unsuccessful initial public offering, SoftBank increased its investment in WeWork and appointed real estate expert Sandeep Mathrani as the startup's CEO. In 2021, SoftBank arranged for WeWork to go public by merging with a blank-check acquisition company, valuing it at $8 billion.
WeWork faced additional difficulties when its own landlords, usually focused on long-term leases, began adapting to the office sector's downturn by offering short and flexible agreements, intensifying competition.
Despite debt restructurings, WeWork's bankruptcy became inevitable, and the company obtained a one-week extension from creditors to prolong negotiation efforts.