WeWork, once valued at $47 billion, has filed for bankruptcy in the U.S., marking a dramatic turn in the fortunes of a company that was once considered the future of the workplace. The bankruptcy filing provides protection from creditors and landlords as the company navigates its substantial debts. WeWork’s current valuation is now less than $50 million, highlighting the steep decline from its peak.
The bankruptcy proceedings will impact WeWork’s operations in the U.S. and Canada, but the co-working spaces in the UK remain open and operational. In an email to tenants in London, WeWork assured its commitment to providing services and remaining in the majority of its buildings.
Despite its financial challenges, WeWork had more than 700 sites globally and around 730,000 members as of the end of June. The company, known for its flexible office spaces, has faced billions of dollars in liabilities and has been loss-making. The bankruptcy protection is aimed at rationalising its commercial office lease portfolio while ensuring continuity for its users.
WeWork’s struggles began with a failed attempt to raise money through a public listing in 2019, leading to the ousting of its founder, Adam Neumann. The subsequent impact of the pandemic further dampened demand for shared office spaces. In the first half of the current year, WeWork reported losses exceeding $1 billion, largely due to operational expenses and other costs.
The company has been making efforts to sell parts of its business, close locations, and renegotiate long-term leases and debts. SoftBank, a major shareholder, has invested substantial amounts in WeWork even as it continued to incur losses. The company’s challenges and internal dealings have been widely covered in the media, including in the Apple TV Series “WeCrashed.”
As WeWork enters bankruptcy proceedings, the co-working industry faces increased competition and potential tenant churn, especially if WeWork cuts back on member perks and events to save costs. The bankruptcy filing comes after WeWork informed investors last month that it was not making loan payments. Adam Neumann expressed disappointment over the fall of WeWork and believes that with the right strategy and team, a reorganisation could lead to a successful emergence.