Yahoo Finance WeWork could file for bankruptcy within days
WeWork is reportedly planning on filing for bankruptcy as early as next week.
The flexible workspace company is expected to file for Chapter 11 bankruptcy protection in the US, the Wall Street Journal reported on Tuesday.
Shares in WeWork dropped more than 30pc during after hours trading following the reports.
WeWork, which takes long leases from office providers and sublets them on monthly contracts, has lost nearly 98pc of its market value in the past year as people continue to work from home.
WeWork, once a darling of Silicon Valley that was valued at $47bn (£38.7bn), warned in August that it faces bankruptcy unless it can “improve liquidity and profitability over the next 12 months”.
The shared office provider this year has restructured its debt and begun renegotiating the majority of its leases in hopes of drastically reducing costs, warning that it would close down “unfit and underperforming” locations.
However, WeWork has entered a seven-day forbearance agreement with its lenders after defaulting on interest payments in October, according to a regulatory filing on Tuesday.
Last month, interim chief executive David Tolley took up the leadership role permanently and has been tasked with turning around the business.
Earlier this year, Mr Tolley blamed the firm’s woes on the oversupply of office space following the pandemic.
He said: “Excess supply in commercial real estate, increasing competition in flexible space and macroeconomic volatility drove higher member churn and softer demand than we anticipated, resulting in a slight decline in memberships.”
WeWork was co-founded by entrepreneur Adam Neumann in 2010 and rapidly expanded in an era of low interest rates.
However, the Softbank-backed start up was forced to abandon its listing on the New Stock Exchange in 2019 after investors questioned the company’s significant losses, corporate governance and the sustainability of its debt-fuelled business.
Mr Neumann stepped down as chief executive following intense pressure from investors and board members shortly after the cancelled initial public offering.
WeWork made its public debut two years later in a deal which valued the company at $8bn, roughly a fifth of what it was worth at its 2019 peak.
WeWork declined to comment.
