SoftBank Group-backed startup WeWork, which once sought to reshape the office sector by changing the way people went to work worldwide, filed for bankruptcy protection on Monday after reporting liabilities of $10-$50 billion.
“WeWork Inc. and certain of its entities filed for protection under Chapter 11 of the US Bankruptcy Code, and intend to file recognition proceedings in Canada," the co-working space provider said in a statement.
The company's locations and franchises outside the US and Canada are not affected by the bankruptcy filing, WeWork stated. WeWork India CEO Karan Virwani also asserted that the Indian business will not be affected by the filing.
In its filing in the New Jersey federal court, WeWork sought to cancel leases in particular locations that the firm said are largely non-operational. Following the filing, the company will get legal protection from its creditors and will be able to negotiate with its landlords.
The rise and fall of WeWork
WeWork was founded by Adam Neumann and Miguel McKelvey in 2010 after they sold GreenDesk, a Brooklyn-based "eco-friendly coworking space" they had established in 2008.
By 2014, a Forbes report said the firm is “the fastest-growing lessee of new office space in New York”. The co-working company was privately valued at $47 billion in early 2019 by its investors.
The workspace provider failed to make a profit ever since it went public in October 2021, after a failed first attempt in 2019. As of December 2022, it operated 43.9 million square feet of space globally, of which 18.3 million square feet of space was reported in the US and Canada.
The shares of WeWork, which has been struggling since the pandemic, have lost around 99 per cent of their value this year. In March, the firm had reached deals to slash its debt by about $1.5 billion and extend the date of some maturities in a bid to preserve much-needed cash.
In June 2023, WeWork reportedly had more than 700 locations around the world and about 730,000 members.
In August 2023, the co-working space provider announced expense control initiatives amid “substantial doubt” that it can stay in business. The latest move also comes on heels of more than tens of thousands of layoffs in the tech sector over the past year.
The exits of CEO Sandeep Mathrani in May and CFO Andre Fernandez in June were also a major blow to the workspace provider.
