WeWork is the most talked about company across the world right now as the co-working space company, was once the most valuable U.S. startup, worth $47 billion, has filed for bankruptcy.
For a well-known and extensively distributed company, this is one of the largest turnarounds in the past few years. While industry experts saw this coming, the general public was taken aback given WeWork is a publicly traded corporation with operations in over 35 countries.
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.
These past few years have seen one of the most spectacular business collapses in recent U.S. history at WeWork. The company attempted to go public five years ago but was unsuccessful. In 2019, it was valued at $47 billion in a transaction headed by Masayoshi Son's SoftBank.
The Covid pandemic worsened the situation by forcing several businesses to end their leases suddenly. The following economic downturn also forced more clients to close.
In August, it said that there was "substantial doubt" regarding its capacity to go on business as usual. A few weeks later, it announced that it was going to renegotiate almost every lease and pull out of "underperforming" locations.
As of June 30, WeWork's real estate portfolio stretched across 777 locations in 39 countries, with occupancy levels approaching those of 2019. However, the business is still not profitable.
A combination with a special purpose acquisition company allowed the business to go public in 2021, two years after its first proposal for an IPO was infamously shelved due to investor worries regarding the company's governance, valuation, and growth prospects. Adam Neumann, the company's founder, resigned as CEO as a result of the failed sale, and WeWork's valuation, which had previously reached $47 billion, fell precipitously.
With the pandemic upending work habits, other shared office space companies have also experienced difficulties. IWG Plc subsidiaries and Knotel Inc. filed for bankruptcy in 2020 and 2021, respectively.
