WeWork Set to File for Bankruptcy Next Week
WeWork, the SoftBank Group-backed company, is reportedly planning to file for bankruptcy as early as next week, according to a source familiar with the matter.
The flexible workspace provider has been struggling with a significant debt burden and substantial losses. Shares of WeWork fell by 32% in extended trading following the news, bringing their total decline for the year to approximately 96%.
The Wall Street Journal first reported the potential bankruptcy filing, stating that WeWork is considering filing a Chapter 11 petition in New Jersey. The company has declined to comment on the matter. Earlier on Tuesday, WeWork announced that it had reached an agreement with creditors to temporarily postpone payments for some of its debt. However, the grace period is nearing its end.
As of June, WeWork had a net long-term debt of $2.9 billion and over $13 billion in long-term leases. These financial challenges come at a time when rising borrowing costs are negatively impacting the commercial real estate sector. WeWork's potential bankruptcy filing would be a significant setback for the company, which was privately valued at $47 billion in 2019. It would also be a blow to SoftBank, which has invested billions in the company.
WeWork's troubles began in 2019 when its plans to go public fell through due to investor skepticism about its business model and concerns about its losses. Despite going public in 2021 at a much lower valuation, the company has continued to struggle financially. In August, WeWork raised doubts about its ability to sustain operations. Several top executives, including CEO Sandeep Mathrani, have left the company this year.
WeWork Singapore has not provided any specific details about how the potential bankruptcy filing will impact its operations. In response to queries, the company stated that it does not comment on speculation. It reassured its members that it remains committed to providing exceptional office space and services throughout the region. WeWork currently has 14 locations in Singapore.
In summary, WeWork is reportedly planning to file for bankruptcy next week due to its significant debt and losses. The company's shares have plummeted and it is considering a Chapter 11 petition in New Jersey. WeWork's financial struggles have been ongoing since its failed attempt to go public in 2019. The potential bankruptcy filing would have a significant impact on the company and its major investor, SoftBank.
WeWork plans to file for bankruptcy as early as next week, according to a source familiar with the matter.
Shares of WeWork fell 32% in extended trading after the news broke.
WeWork is considering filing a Chapter 11 petition in New Jersey.
The company had a net long-term debt of $2.9 billion and over $13 billion in long-term leases.
Source: Channel News Asia