WeWork plans to file for bankruptcy - report

WeWork credit: Shutterstock
WeWork credit: Shutterstock

According to a report in "The Wall Street Journal", the loss-making shared workspace company intends to file a petition in New Jersey next week.

Shared workspace company WeWork (NYSE: WE) plans to file for bankruptcy next week, "The Wall Street Journal" reported yesterday, on the basis of sources familiar with the company. WeWork’s share price fell 11.63% in normal trading yesterday, giving the company a market cap of $120 million, but fell 42% in after-hours trading following the report. Altogether, the company’s share price has fallen by about 96% this year. "The Wall Street Journal" said that the company, which at its peak was valued at $47 billion, is considering filing for Chapter 11 protection in New Jersey.

WeWork missed interest payments to its bondholders, and has a thirty-day grace period in which to make the payments. If it fails to do so, it will be considered insolvent. The grace period is about to end, but WeWork reported that it had entered into a forbearance agreement with the bondholders giving it a further seven days to make the payments.

In August this year, the company said that there was "substantial doubt" as to whether it would be able to continue in business. Several senior managers left the company, among them its CEO CEO Sandeep Mathrani.

In 2019, the company, co-founded by Israeli entrepreneur Adam Neumann, failed in a bid to go public amid doubts about its business model and its heavy losses. Neumann stepped down as CEO. In 2021, WeWork became listed on the New York Stock Exchange through a SPAC merger at a valuation of $9 billion. Its main shareholder, Japanese investment giant SoftBank, injected tens of billions of dollars into the company, but it continued to post losses. The company has extensive activity in Israel.

According to the report in "The Wall Street Journal", on the basis of the company’s filings, WeWork has debts amounting to $10 billion repayable between now and the end of 2027, and a further $15 billion of debt repayable from 2028 onwards.

Published by Globes, Israel business news - en.globes.co.il - on November 1, 2023.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2023.

WeWork credit: Shutterstock
WeWork credit: Shutterstock
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