Out of office: WeWork files for bankruptcy protection in US, plans to do the same in Canada
Co-working company WeWork announced on Monday, November 6 that it filed for bankruptcy protection in the US, with similar plans intended for its Canadian operations.
“To successfully achieve its goals, 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 under Part IV of the Companies’ Creditors Arrangement Act,” reads a release. Locations outside North America are not part of the process, and international franchises won’t be affected.
The New York-based company has 2,500 employees and several locations across Canada. WeWork, backed by investment holding company SoftBank Group, was once valued at US$47 billion in 2019 but now “struggles with a massive debt pile and hefty losses,” reports Reuters.
The company’s stock lost 99% of its value, and, according to CNN, WeWork was worth US$45 million before its bankruptcy filing.
The company announced it would be “requesting the ability to reject the leases of certain locations, which are largely non-operational, and all affected members have received advanced notice.”
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“Now is the time for us to pull the future forward by aggressively addressing our legacy leases and dramatically improving our balance sheet,” said WeWork CEO David Tolley.
“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.”
The Wall Street Journal was the first to report the news about the bankruptcy on October 31.
In early October, WeWork said it wouldn’t be able to make two sets of interest payments of over US$95 million. The company received a 30-day grace period agreement with creditors to make payments on some of its debts due to expire.
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The news shouldn’t come as a surprise to those who have been following the company’s ongoing financial struggles.
WeWork’s 2023 second-quarter earnings report stated, “As a result of the company’s losses and projected cash needs, combined with increased member churn and current liquidity levels, substantial doubt exists about the company’s ability to continue as a going concern.”
The company saw revenues of US$844 million in the second quarter, representing an increase of 4% year-over-year, but a net loss of nearly US$400 million compared to US$635 million in the second quarter of 2022.
With files from Kenneth Chan
This article was originally published on November 2.
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