IWG is preparing to set Regus into insolvency if landlords do not lower their rents. Like many other shared office operators, IWG takes out long-term leases then sublets them to companies on short-term leases.
The company also operates through several smaller subsidiaries that are responsible for their leases, which gives IWG the ability to place them into administration to walk away from their lease commitments. This news follows IWG filing bankruptcy for some of its affiliates across the US in order to provide breathing room while the company attempts to restructure leases.
Although IWG has not revealed how much it would save by filing for insolvency for Regus, The Times has reported it would relieve IWG of £790 million in lease agreements across 500 locations.
IWG has said that it is utilizing insolvency because “the Covid-19 pandemic is a black swan event and it has severely impacted our business and presented us with unforeseen challenges.”
While the company has expressed concern that the pandemic will continue to disrupt business into 2021, it remains optimistic about the future of coworking in general, adding that it is looking into expansion opportunities into suburban areas to accommodate growing demand for satellite offices.
