Home » US business news » Office-sharing company WeWork set to file for bankruptcy

Office-sharing company WeWork set to file for bankruptcy

By Hugh Fort in US business news, posted November 1, 2023

WeWork, the once-prominent office-sharing company, is reportedly planning to file for bankruptcy as early as the upcoming week.

The firm, which was previously envisioned as the future of office spaces, has faced a series of challenges over the years.

These include a failed attempt in 2019 to go public and the departure of its co-founder.

The COVID-19 pandemic further exacerbated its problems, with a significant shift towards remote working.

The Wall Street Journal reported the potential bankruptcy filing is being considered in New Jersey.

When approached for a comment on these speculations, a WeWork spokesperson stated, "We do not comment on speculation."

Earlier in the week, WeWork informed the US financial regulator about its agreement with creditors to temporarily delay some debt payments.

Following these reports, WeWork's shares experienced a sharp decline, dropping over 40 percent in after-hours trading in New York.

Tumultuous journey

The company's journey has been tumultuous since its initial plans to go public in 2019 were derailed due to concerns about its debt, management, and sustained losses.

Founder Adam Neumann resigned as CEO shortly before the company confirmed the cancellation of its share sale, citing that the scrutiny on his leadership had become a major distraction.

The pandemic's onset further complicated matters, leading to a surge in remote work and leaving WeWork facing criticism from tenants seeking to break their leases.

Despite these challenges, the company persisted.

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"Substantial doubt" over ability to continue

In August, WeWork raised "substantial doubt" about its ability to continue operations.

Efforts were made to mitigate losses by selling off non-core businesses, reducing the workforce, and renegotiating leases.

WeWork eventually went public on the New York Stock Exchange in 2021, albeit at a significantly reduced valuation.

SoftBank, the Japanese conglomerate, has invested heavily in WeWork, even as the firm continued to operate at a loss. From a peak valuation of approximately $47 billion in early 2019, WeWork's stock market value has plummeted nearly 98% in the past year.

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The company acknowledged the challenges it faced, attributing them to reduced demand and a challenging operational climate.

Several top executives, including CEO and chairman Sandeep Mathrani, have also left the company this year.

As of June's end, WeWork operated 777 locations across 39 countries.

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