WeWork Just Filed For Bankruptcy

WeWork has presented due to bankruptcy. The move comes as the company is pressured by mounting debts, high interest rates and an increasing number of people working from home.

WeWork filed for Chapter 11 protections, the company Announced Monday night. The process allows a company to continue operating while it reorganizes. WeWork locations will generally remain open, the company says, and the process affects only locations in the U.S. and Canada, as it plans to apply for similar protections there as well.

But as part of its filing, WeWork is asking to drop leases at some locations it says are “largely non-operational.”

“Now is the time to drive the future by aggressively addressing our legacy leases and dramatically improving our balance sheet,” WeWork CEO David Tolley said in announcing the bankruptcy filing.

It follows an epic fall for the once-hyped coworking company. In 2019, with a lofty valuation of $47 billion, the company attempted to go public but failed before ousting its eccentric founder and CEO Adam Neumann. In 2021, after a restructuring, WeWork went public. Now, WeWork has a market capitalization of around $45 million.

Even as WeWork righted itself and appointed more experienced leaders, it faced enormous changes in the real estate market. The Covid-19 pandemic emptied offices around the world and demand for working from home has since increased. Now, expensive offices in once-bustling city centers sit empty. Dylan Burzinski, an analyst at real estate advisory firm Green Street and head of office sector research, says such rapid changes hit WeWork hard. The company is struggling to compete with cheap office space as interest rates rise, posing greater risk.

And 2023 has turned out to be another tumultuous year for WeWork. CEO Sandeep Mathrani left the company in May and joined in 2020. He issued a going concern warning in August, a move that raised questions about its future survival. So we work did not make the required interest payments at the beginning of October.

in September letter, Tolley wrote that the company was working to “renegotiate nearly all of our leases” and would close underperforming locations. Tolley said the company’s leases accounted for two-thirds of its total operating expenses in the second quarter of 2023 and are “too high and dramatically out of step with current market conditions.” But at the time, Tolley was optimistic: “Let me close by making one thing clear: WeWork is here to stay.”