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.Â
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.
