WeWork Preparing to File for Bankruptcy Amid Massive Debt and Losses

WeWork is reportedly preparing to file for bankruptcy as soon as the coming week, according to an insider, due to the company’s significant debt and considerable losses. 

The SoftBank Group-supported firm has seen its shares plummet by 32% in after-hours trading following the initial report by the Wall Street Journal, contributing to a total drop of approximately 96% over this year.

The flexible workspace provider is contemplating filing a Chapter 11 petition in New Jersey, as per the WSJ’s sources. WeWork did not provide any comments on the matter.

Earlier today, WeWork announced that it had negotiated a temporary delay in payments on some of its debt with creditors, as the grace period approaches its conclusion.

As of the end of June, the company had a net long-term debt of $2.9 billion and over $13 billion in long-term leases, during a period where increased borrowing costs are negatively impacting the commercial real estate industry. If WeWork does file for bankruptcy, it will represent a dramatic turn of events for a company that was privately valued at $47 billion in 2019. This would also be a blow to SoftBank, the investor that invested billions into the company.

In August, WeWork expressed “substantial doubt” regarding its ability to sustain operations, with several high-ranking executives, including CEO Sandeep Mathrani, leaving the company this year.

WeWork has been in a state of chaos since its failed attempt to go public in 2019, which collapsed due to investors’ doubts about its business model of taking on long-term leases and renting them out short-term, along with concerns over its substantial losses. The company’s troubles have persisted over the years, although it eventually managed to go public in 2021, albeit at a significantly lower valuation. Despite receiving tens of billions from its main supporter, the company has continued to operate at a loss.