WeWork, US real estate firm, files for bankruptcy amid debt crisis

WeWork, a US-based real estate firm, says it has filed for bankruptcy amid its debt problems.

In a statement on Monday, the company said the decision is “to successfully achieve its goals”.

“WeWork filed for protection under chapter 11 of the US bankruptcy code, and intend to file recognition proceedings in Canada under Part IV of the companies’ creditors arrangement Act (the ‘CCAA recognition proceedings’),” the statement reads.

The firm, which has other branches across the world, including in Nigeria, said other locations outside of the US and Canada are not part of this process.

“WeWork’s franchisees around the world are similarly not affected by these proceedings,” the firm said.

“WeWork has a deliberate and value-maximizing lease rejection plan that is expected to position the company for operational and financial success. 

“As part of today’s filing, WeWork is requesting the ability to reject the leases of certain locations, which are largely non-operational and all affected members have received advanced notice.”

Commenting on the development, David Tolley, WeWork’s chief executive officer (CEO), said the firm seeks to restructure its operation, thereby remaining the “leader in flexible work”.

“It is the WeWork community that makes us successful. Our more than half-million members around the world turn to us for the best-in-class spaces, hospitality, and technology that our 2,500 dedicated employees and valued partners provide,” Trolley said.

“WeWork has a strong foundation, a dynamic business, and a bright future.

“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.

“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.”

In a regulatory filing in August 2023, the company had expressed concerns over its ability to continue operations due to “our losses and negative cash flows from operating activities”.

The company was also said to have reported liabilities ranging from $10 billion to $50 billion.

WeWork, which was once valued at $47 billion in 2019 in a round led by Masayoshi Son’s SoftBank, is now worth $44.4 million, according to the market capitalisation details on the New York Stock Exchange (NYSE).

The firm had also tried and failed at going public five years ago.

The real estate organisation said the bankruptcy would affect its business in the US and Canada but spaces would remain open and operational.

WeWork was created in 2010 and has more than 700 sites around the world and about 730,000 members.