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Serendipity Labs, A Major Brand In Coworking, Has Filed For Bankruptcy

by Jamie Orr
December 7, 2020
in Business
Reading Time: 3 mins read
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Serendipity Labs, Inc. is moving forward with bankruptcy proceedings, according to a recent Atlanta court filing.

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  • Serendipity Labs, Inc. is moving forward with bankruptcy proceedings, according to a recent Atlanta court filing.
  • Statements from the bankruptcy filing suggest the pandemic caused a drop in revenue and lack of interest from investors.

In a recent Atlanta court filing, it has been announced that Serendipity Labs, Inc. is moving forward with bankruptcy proceedings. 

This follows a July petition by the company to use the Small Business Reorganization Act (SBRA) to restructure its corporate level senior debt as part of an expansion of the SBRA eligibility criteria under the CARES Act.

The filing details both an existing asset purchase agreement (APA) from a Stalking Horse Bidder and the authorization and approval for the sale of Serendipity Labs, Inc.’s assets through an auction process to be held in March of 2021. Listed in the APA are the company’s acquired assets, including Serendipity Labs Franchise International, LLC, Serendipity Labs Management, LLC as well as its coworking location entities and all contracts.

The Stalking Horse Bidder is Bay Point Capital Partners II, LP, which has agreed to a negotiated price of $1.1M USD as well as a debtor-in-possession (DIP) loan to allow for continued operations of Serendipity Labs, Inc. during the sale and auction process.

Based on the filing, it is noted that if the Stalking Horse Bidder deal ultimately closes, they will hire substantially from the current employee and management teams to continue operating the Serendipity Labs, Inc. business.

However, the asset purchase agreement transaction is subject to higher and better offers. Additional offers will be sought from qualified buyers through March 9, 2021 with a live auction commencing at 10:00am Eastern Time on March 12, 2021. Bidding, to proceed in increments of $100,000 will start at $1.3M USD.

What Went Wrong?

In January of this year, Serendipity Labs had announced continued expansion and planned to enter several new markets with multiple openings in 2020. At the same time, the company was also pursuing additional investment.

When the pandemic hit, however, many coworking spaces were forced to shut down as part of stay-at-home orders, resulting in decreases in revenue for the company.

It also caused investors to shy away from the shared office industry, according to statements from the bankruptcy filing.

During the summer of 2020, the company looked again for an investor, this time to sponsor an exit from a Chapter 11 filing, resulting in the current asset purchase agreement from Bay Point Capital Partners II, LP.

“A consistently innovative leader”

Serendipity Labs, Inc., was founded in 2011 by industry veteran John Arenas. Using his decades of experience in the office suite and hospitality industries, Serendipity Labs was established to deliver inspiring and inviting office and coworking experiences for the modern workforce that also met the standards of larger corporate enterprises.

From its hospitality-infused mission to its focus on suburban and secondary markets, in addition to urban centers and supporting local artists, Serendipity Labs has been a consistently innovative leader in the workplace-as-a-service sector.

The global pandemic and various states of lockdown in every country has been challenging for the shared office sector, with drops in occupancy rates and an overall decrease in demand.
While it is anticipated that the flexible workspace industry will recover and experience growth as part of changing workplace dynamics, this year’s roadblocks have caused many coworking locations to close their physical doors, with future reopenings still uncertain for the time being for many, and permanent closures for others.

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Jamie Orr

Jamie Orr

Jamie Orr, PhD is the cofounder of Jellyswitch, enabling the best possible experience for your flexible workspace. She also co-founded Cowork Tahoe, situated on the shores of beautiful Lake Tahoe. When not helping grow the flexible workspace movement, she is likely offering unsolicited science fun facts or chasing her two daughters on the mountain trails.

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