Office-sharing giant WeWork filed for Chapter 11 bankruptcy protection in a New Jersey federal court, marking a significant step in the company’s tumultuous journey. The bankruptcy filing is specific to WeWork’s U.S. and Canadian locations, and it comes as the company grapples with liabilities ranging from $10 billion to $50 billion, according to bankruptcy documents.
WeWork’s fall from grace has been striking. Once valued at an impressive $47 billion in 2019, the company’s efforts to go public five years ago failed. The COVID-19 pandemic added to its troubles as businesses terminated leases, and the ensuing economic downturn forced more clients to shutter their operations.
In a press release, WeWork CEO David Tolley expressed gratitude for the support of financial stakeholders and emphasized the company’s commitment to strengthening its capital structure. The bankruptcy filing is seen as a means to trim “non-operational” leases and restructure the company’s financial footing. Former CEO and co-founder Adam Neumann, who departed the company in 2019, noted his disappointment but expressed optimism about WeWork’s potential for a successful reorganization with the right strategy and team.
WeWork had previously announced active lease renegotiations, suggesting it was “here to stay.” The company has long-term lease obligations amounting to nearly $16 billion and operates in 777 locations worldwide.
The bankruptcy proceedings involve legal advisors Kirkland & Ellis and Cole Schotz, while PJT Partners serves as the investment bank, with support from C Street Advisory Group and Alvarez & Marsal. WeWork’s shares, which had dropped significantly, were halted on the stock market.