The American shared office giant WeWork, which has been in great difficulty for several years, announced in a statement on Monday that it was filing for bankruptcy to negotiate a “significant” reduction of its debt with its creditors and restructure its activities.
To complete this process, “WeWork and some of its subsidiaries have initiated a ‘Chapter 11’ (bankruptcy law, editor’s note) application procedure and intend to file a recognition procedure in Canada under the of the law on agreements between companies and creditors,” the group announced in a press release, specifying that the procedure does not affect its subsidiaries outside of these two countries.
“It is time for us to look to the future by aggressively attacking our old leases and considerably improving our balance sheet,” said the group’s CEO, David Tolley, quoted in the statement, for whom “these measures will allow us to remain the world leader in “flexible workspaces”.
WeWork had warned the US stock market watchdog (SEC) in early August that it feared for its survival. “There are substantial doubts about the company’s ability to continue as a going concern,” he said.
Former startup star
The cause, according to the company: economic losses, liquidity needs and a drop in the number of tenants. He explained that he had lost billions of dollars during the first six months of 2023, due to falling demand linked to poor economic conditions.
The rating agency S&P announced on November 1 that it would downgrade the group’s rating to the “partial default” category, after WeWork took stock of its problems with the payment of interest on its debt.
WeWork, once a rising star, has raised billions of dollars from SoftBank Group. But the controversial management of its founder, Adam Neumann, worried investors, who ended up ousting him in 2019.
Then the pandemic emptied the offices and the company failed to recover while demand for professional premises fell with the rise of teleworking. The group was valued at up to $47 billion, but its shares were worth just 80 cents as of Monday afternoon at the close of the New York Stock Exchange, for a market capitalization of $44.49 million.
Source: BFM TV
