A start-up that captivated investors in the 2010s and attracted billions of dollars in capital, filed for bankruptcy on Monday, creating a plan to reassess its entire portfolio after failing to pay its debts.
WeWork, a company that seeks to provide flexible workspaces for rent, filed for protection under Chapter 11 bankruptcy in the U.S. and plans to file for similar protections in Canada, according to a Monday night announcement from the company. The company was once valued at $47 billion after venture capital funds flocked to invest in the start-up.
“Now is the time for us to pull the future forward by aggressively addressing our legacy leases and dramatically improving our balance sheet,” David Tolley, CEO of WeWork, said in the announcement. “We defined a new category of working, and these steps will enable us to remain the global leader in flexible work. 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. We remain committed to investing in our products, services, and world-class team of employees to support our community.”
The company first missed payments for its debts on Oct. 2 by failing to pay interest to bondholders, giving the company just a 30-day grace period to pay, according to The Wall Street Journal. On Oct. 31, WeWork and bondholders struck a deal to give an additional seven days to negotiate before a default occurs.
Charted: The Rise and Fall of WeWork
https://t.co/jUttqGkHdO pic.twitter.com/Eo8qDB6vpp
— Visual Capitalist (@VisualCap) November 1, 2023
Stakeholders and WeWork have already entered into a Restructuring Support Agreement covering 92% of the company’s debt that outlines the expectations of both parties, according to the announcement. The company will also seek to rationalize its existing portfolio of commercial office leases to assess profitability.
The company has also developed a plan through its bankruptcy filing that requests the ability to reject leases at specific locations that are nearly non-operational, according to the announcement.
WeWork announced in September that it was going to renegotiate nearly all of its leases, which totaled 777 locations as of June 30, according to the Associated Press. The company’s lease obligations for the second quarter of 2023 made up around two-thirds of its total operating expenses, which Tolley described as “dramatically out of step with current market conditions.”
WeWork did not immediately respond to a request to comment from the Daily Caller News Foundation.
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