[bctt tweet=”Earlier this year, WeWork was valued at $47 billion thanks to a financing round led by its largest shareholder SoftBank. Little did anyone know, this move marked the beginning of the end to WeWork’s reign.” username=”allwork_space”]
Over the course of just a few months, the firm revealed it lost $900 million during the first half of the year, co-founder Adam Neumann stepped down as CEO and now the company has canceled its plans for an IPO.
Now, SoftBank and JPMorgan Chase are finding any way to keep the company going by pulling together financing packages with the help of other investors.
In an effort to stay afloat, WeWork is letting go of its noncore businesses, selling off assets such as Neumann’s private jet and laying off at least 2,000 employees.
Moving forward, the firm is focusing on negotiating or getting out of its most expensive leases. Landlords who have WeWork as a tenant do not want it to go bankrupt and will likely give it a reprieve by negotiating rent, but figuring out which deals where WeWork can successfully do this will be complicated.
If it goes bankrupt, it could almost instantaneously break or renegotiate leases, but not without shaking several commercial real estate markets where it has a large presence.
“You’ve got this perfect storm where you can just see things feeding off each other and making the storm worse,” said Charley Moore, CEO of Rocket Lawyer, a provider of online legal support and documents. “The only way most businesses break free of that is with a significant restructuring of both costs and capitalization.”
Aayat is an editor for the Daily Digest based in Lexington, Kentucky. She has worked with local coworking spaces since August of 2017 and enjoys taking her firsthand knowledge to write about the fascinating, constantly evolving world of flexible workspaces.