WeWork is making subtle progress on its road to restructure its massive lease agreements amid Chapter 11 bankruptcy.
According to a recent report published by CoStar, around 24 landlords have now withdrawn motions demanding outstanding rent payments.
The news comes after several landlords previously accused WeWork of using aggressive negotiation tactics, such as withholding $33 million in unpaid rent that was due on January 1, to gain leverage lease discussions. WeWork had argued that landlords could receive payment through alternative methods including letters of credit instead of depleting its cash reserves.
It’s reported that WeWork has now successfully renegotiated leases with over 80 building landlords globally, and the company stated that it has saved over $1.5 billion in future rent payments.
However, WeWork’s lease negotiations in the U.S. remains far more uncertain, with approximately 200 U.S. locations tied to their bankruptcy case yet to be resolved. It’s reported that only around 3% of the company’s U.S. locations have secured new lease agreements. Further complicating matters, U.S. bankruptcy laws require companies to continue honoring lease agreements until they are officially rejected through court. The legal process allows companies 120 days from the bankruptcy filing date, in this case, November 6, 2023, to either assume or reject each lease, according to CoStar.
In court filings WeWork is stressing its business restructuring and the renegotiation of lease agreements to alleviate unsustainable rent expenses. However, the filings also reveal that WeWork is actively seeking new financing as it stands at an urgent moment in its bankruptcy proceedings.
There are parties that have publicly expressed interest in a potential bid for the coworking giant, including Rental platform Rentberry, and ousted WeWork CEO Adam Neuman, but WeWork has publicly expressed that it is not interested in a buyout.
WeWork’s next status hearing on its bankruptcy case is scheduled for March 20.
