Office sharing company WeWork has filed for Chapter 11 bankruptcy protection.
In a statement on Monday, the company said it had entered into a restructuring support agreement with stakeholders to “drastically reduce” the company’s debt while further evaluating its commercial office lease portfolio.
WeWork is requesting the “ability to reject the leases of certain locations”, which the company says are largely non-operational, as part of the filing.
Specific estimates of total locations impacted by the announcement were not given but all affected members have received advanced notice, the company said.
In a prepared statement, chief executive David Tolley said: “Now is the time for us to pull the future forward by aggressively addressing our legacy leases and dramatically improving our balance sheet.
“We defined a new category of working, and these steps will enable us to remain the global leader in flexible work.”
In August, the New York company – which was once valued as high as 47 billion US dollars (£38.1 billion) – sounded the alarm over its ability to remain in business which it saw was contingent upon improving its liquidity and profitability overall in the next year.
The company went public in October 2021 after its first attempt to do so two years earlier collapsed spectacularly, which saw the departure of founder and chief executive Adam Neumann and Japan’s SoftBank stepped in to keep WeWork afloat, acquiring majority control.
Today, we take another step forward to best position WeWork for the future. We remain committed to our members and to delivering a best-in-class experience in our spaces. https://t.co/b2pZQSWJBQ pic.twitter.com/7M2gpKyANt
— WeWork (@WeWork) November 7, 2023
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In September, when WeWork announced plans to renegotiate nearly all of its leases, Mr Tolley said the company’s lease liabilities accounted for more than two-thirds of its operating expenses for the second quarter of this year — remaining “too high” and “dramatically out of step with current market conditions”.
At the time, WeWork said it could exit more underperforming locations.
On June 30, the latest date with property numbers disclosed in securities filings, WeWork had 777 locations in 39 countries.
Beyond real estate costs, WeWork has pointed to increased member churn and other financial losses.
