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. WeWork reported total debts of $18.65 billion against total assets of $15.06 billion in an initial 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 Covid 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 co-founder and CEO 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 that it had been actively renegotiating leases and that it was “here to stay.” WeWork 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.
