- Serendipity Labs, Inc, the parent holding company of the Serendipity Labs brand of coworking spaces, has announced they have emerged from Chapter 11.
- The Chapter 11 proceedings were initially undertaken in July of 2020 to restructure corporate level senior debt using the expanded eligibility criteria of the Small Business Reorganization Act (SBRA) under the CARES Act.
- Serendipity Labs has plans for twelve additional openings across the U.S. this year.
Serendipity Labs, Inc, the parent holding company of the Serendipity Labs brand of coworking spaces, has announced they have emerged from Chapter 11.
Its plan of reorginazation received court approval and was confirmed on May 27, 2021. The company is emerging from a voluntary Chapter 11 with $12.5 million in new exit funding in place to repay all creditor claims 100 cents on the dollar, and with interest, and is now poised to accelerate its network growth.
The Chapter 11 proceedings were initially undertaken in July of 2020 to restructure corporate level senior debt using the expanded eligibility criteria of the Small Business Reorganization Act (SBRA) under the CARES Act. The reorganization did not involve the Company’s licensing, management subsidiaries, or any of its coworking locations.
However, in October of 2020, the court ruled that the company was ineligible to proceed under the newly enacted Subchapter V of Chapter 11, designed specifically for small businesses, because it was an affiliate of an “issuer” (in this case, furniture manufacturer, Steelcase, a publicly traded company). As a result of the ruling, Serendipity Labs could no longer proceed with bankruptcy under Subchapter V and instead had to follow a more stringent process as a traditional Chapter 11 case.
Despite this setback, the company successfully navigated the reorganization process while maintaining all company operations and continuing to expand.
“This is the best possible outcome and a very successful reorganization. Our exit financing allows us to repay all creditors in full and positions us to capture the new demand for flexible workplaces in secondary markets and suburbs, as well as selectively in urban locations,” says John Arenas, Chairman and CEO, Serendipity Labs.
The company operated on a cash flow positive basis in 2020 and has continued to open new locations, with plans for twelve additional openings across the U.S. this year. Its area development partner Newflex is expected to open the first U.K. locations as well.
A press release from Serendipity Labs, Inc. includes details of the reorganization plan and exit financing. Bay Point Advisors is the lead investor in the Company’s exit financing. Charles Andros, President and Chief Investment Officer of Bay Point Advisors, will join the Company’s board of directors. Doug Sharp, who previously served global real estate service firm JLL as president, Corporate Services, is also joining the Serendipity Labs board.
“The Serendipity Labs management team has decades of experience in the flexible office industry, and every aspect of their brand reflects their understanding of corporate workplace requirements,” says Andros. “We are excited about accelerating their growth. I am confident their workplace-as-a-service business model and their superior product and brand platform allow for scalability, and I am looking forward to being on the board.”
Sharp adds, “The pandemic accelerated a shift in the workforce toward hybrid workstyles. Employees are demanding more flexible work arrangements and companies need alternatives to conventional long term lease commitments. To compete for talent, and to remain competitive, employers need a trusted workplace-as-service partner that meets corporate standards for outsourced, flexible workplaces, and landlords are responding by offering coworking in their buildings managed by trusted national brands.”
Sharp, looking to the future for the Company, says, “I am delighted to be an investor and to serve on the Serendipity Labs board during this exciting period of growth.”
Paul Ciminelli, president and CEO of Ciminelli Real Estate Corporation, a full-service real estate firm with a portfolio spanning the eastern U.S, has seen this trend firsthand. “We selected Serendipity Labs as an amenity for our buildings and opened the first one in Buffalo this winter. The market has been impressed with the Serendipity Labs workplace design and service level, and our strong membership numbers reflect it.”
Arenas is enthusiastic about the opportunity ahead. “The entire knowledge workforce is seeking better ways to work, and the flexible office industry will now play a central role for occupiers and investors as they respond to this new demand.”
“As the largest network of upscale suburban coworking, we serve as a trusted outsourced workplace provider to companies like Compass, Oracle, Anthem Health and Amazon while providing inspiring places to work close to home but not at home for their employees. Our team has created new offerings for drop-in memberships and dedicated suites that corporate teams can use on a hybrid schedule, and our hub and spoke network allows us to serve companies as they support an increasingly mobile and distributed workforce.”