Posted on 11/07/2023 6:02:19 AM PST by Red Badger
KEY POINTS
Office-sharing company WeWork filed for Chapter 11 bankruptcy protection in federal court Monday.
Valued in 2019 at $47 billion in a round led by Masayoshi Son’s SoftBank, the company tried and failed to go public five years ago.
It disclosed in an August regulatory filing that bankruptcy could be a concern.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Office-sharing company WeWork filed for Chapter 11 bankruptcy protection in New Jersey federal court Monday, saying that it had entered into agreements with the vast majority of its secured note holders and that it intended to trim “non-operational” leases.
The bankruptcy filing is limited to WeWork’s locations in the U.S. and Canada, the company said in a press release. The company reported liabilities ranging from $10 billion to $50 billion, according to a bankruptcy filing.
“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,” WeWork CEO David Tolley said in a press release. “We remain committed to investing in our products, services, and world-class team of employees to support our community.
WeWork has suffered one of the most spectacular corporate collapses in recent U.S. history over the past few years. Valued in 2019 at $47 billion in a round led by Masayoshi Son’s SoftBank, the company tried and failed to go public five years ago.
The pandemic caused further pain as many companies abruptly ended their leases, and the economic slump that followed led even more clients to close their doors.
It disclosed in an August regulatory filing that bankruptcy could be a concern.
WeWork debuted through a special purpose acquisition company in 2021 but has since lost about 98% of its value. The company in mid-August announced a 1-for-40 reverse stock split to get its shares trading back above $1, a requirement for keeping its New York Stock Exchange listing.
WeWork shares had fallen to a low of about 10 cents and were trading at about 83 cents before the stock was halted Monday.
Former CEO and co-founder Adam Neumann said that the filing was “disappointing.”
“It has been challenging for me to watch from the sidelines since 2019 as WeWork has failed to take advantage of a product that is more relevant today than ever before,” Neumann said in a statement to CNBC. “I believe that, with the right strategy and team, a reorganization will enable WeWork to emerge successfully.”
As recently as September, the company said it had been actively renegotiating leases and that it was “here to stay.” The company had close to $16 billion in long-term lease obligations, according to securities filings.
The company leases millions of square feet of office space in 777 locations around the world, according to its regulatory filings.
WeWork has engaged Kirkland & Ellis and Cole Schotz as legal advisors. PJT Partners will serve as its investment bank, with support from C Street Advisory Group and Alvarez & Marsal.
This is breaking news. Please check back for updates.
CNBC’s Ari Levy contributed to this report.
In 2020/21 during the lockdown I was working with a company that used WeWork office space. Anytime I was in that building that vast majority of offices were empty or sparsely populated.
Any it was wasn’t really a revolutionary idea, shared office space has been a business for many years.
“Valued in 2019 at $47 billion in a round led by Masayoshi Son’s SoftBank”
Masayoshi Son was a total idiot falling for this scam.
but you checked in on an ipad right? that didn’t make it a revolutionary tech play?
The question, what about all those commercial leases in various business centers around the country? Those buildings are in real financial trouble now….
The business concept wasn’t a bad idea. Shared office space has been a thing for years, but what WeWork brought to the table was a national network of locations that would provide flexibility for its customers. In my line of work I could easily see a value in a subscription-based work arrangement where I could work in a WeWork office in Cincinnati on Monday, Pittsburgh on Tuesday and Wednesday, and Philadelphia on Thursday before traveling back to my home office at the end of the week.
WeBroke
We had the largest shopping mall in 50 miles here. Now it’s about to close and be torn down for condos......................
WeWentBroke.
It is too bad the masters didn’t get to order their slaves back into the office in time to save this useless excuse for a company.
;-)
WeWork to keep office space EMPTY
The concept needed a lot of work to be practical.
Instead they focused on glitzy advertising and marketing and hilarious claims about “sharing culture”—think “WeWoke”.
That said—I agree with you that a low overhead low key business oriented office space leasing company could make sense.
It would require slow steady growth and careful financial management—boring stuff that tends not to interest the vulture (er venture) capitalists.
These clowns turned it into a joke.
The CRE bubble is massive. It’s why you see investors wanting people to return to the office.
Yep, hard to justify a large empty building, even more difficult to sell when other building owners have the same low usage. Gee do you think that would effect a commercial buildings value today……. MMM… in NYC? Maybe some building owners are upside down with their loans…… MMM…. Paging NY DA, more law suits!
Depending on location, I would think some areas are way underwater.
Fortune (via MSN.com)...
WeWork’s former CEO has a new startup, reportedly valued at more than $1 billion - https://www.cnn.com/2022/08/15/tech/adam-neumann-flow/index.html
In a blog post Monday, Marc Andreessen, cofounder and general partner at the VC firm, announced the investment, without disclosing financial details. He also explained his thinking for backing Flow, a residential real estate company, and Neumann despite the founder’s high-profile fall from grace at WeWork.
“Adam is a visionary leader who revolutionized the second largest asset class in the world — commercial real estate — by bringing community and brand to an industry in which neither existed before,” Andreessen wrote in his post Monday. “Adam, and the story of WeWork, have been exhaustively chronicled, analyzed, and fictionalized — sometimes accurately. For all the energy put into covering the story, it’s often under appreciated that only one person has fundamentally redesigned the office experience and led a paradigm-changing global company in the process: Adam Neumann.”
WeWork co-founder Adam Neumann speaking with Andrew Ross Sorkin. Former WeWork CEO Adam Neumann opens up about his regrets It’s not immediately clear how Flow seeks to revolutionize the residential housing industry. Flow currently has a bare bones website, with the slogan “Live life in flow” and two words stating it will launch in 2023.
Andreessen positioned the new company as a long-awaited solution to the nation’s “housing crisis.” He used a mix of jargon-filled terms — “community-driven, experience-centric service” — to explain how the new startup would “create a system where renters receive the benefits of owners.”
“We think it is natural that for his first venture since WeWork, Adam returns to the theme of connecting people through transforming their physical spaces and building communities where people spend the most time: their homes,” Andreessen wrote. “Residential real estate — the world’s largest asset class — is ready for exactly this change.”
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.