NEW YORK: WeWork has filed for Chapter 11 bankruptcy protection, marking a stunning fall for the office sharing company once seen as a Wall Street darling that promised to upend the way people went to work around the world.
In a late Monday announcement, WeWork said it entered into a restructuring support agreement with the majority of its stakeholders to “drastically reduce” the company’s debt while further evaluating WeWork’s commercial office lease portfolio.
WeWork is also requesting the “ability to reject the leases of certain locations,” which the company says are largely non-operational, as part of the filing. Specific estimates of total impacted locations were not disclosed Monday, but all affected members have received advanced notice, the company said.
“Now is the time for us to pull the future forward by aggressively addressing our legacy leases and dramatically improving our balance sheet,” CEO David Tolley said in a prepared statement. “We defined a new category of working, and these steps will enable us to remain the global leader in flexible work.”
The shuttering of select WeWork locations to cut costs isn’t new. In some past cases, landlords’ building loans moved to special servicing after losing WeWork as a tenant, credit rating and research firm Morningstar Credit had previously said.
While the full impact of this week’s bankruptcy filing on WeWork’s real estate footprint is still uncertain, the company sounded an optimistic note Monday night.
“Our spaces are open and there will be no change to the way we operate,” a WeWork spokesperson said in a statement. “We plan to stay in the vast majority of markets as we move into the future and remain committed to delivering an exceptional experience and innovative flexible workspace solutions for our members.”
WeWork and certain entities filed for Chapter 11 bankruptcy protection in US District Court in New Jersey, with plans to also file recognition proceedings in Canada, according to Monday’s announcement.
WeWork locations outside of the US and Canada will not be affected by the proceedings, the company said, as well as franchisees worldwide.