WeWork goes bankrupt, capping co-working company’s downfall

WeWork Inc., the onetime high flying startup, has filed for bankruptcy protection. In a Chapter 11 petition filed in New Jersey, the New York-based company listed both assets and liabilities in the range of US$10 billion ($13.5 billion) to US$50 billion. This move allows WeWork to remain in operation while an action plan is devised to pay off its liabilities.

The company’s fateful journey began in 2019 when its much-anticipated Initial Public Offering (IPO) was scuttled due to investor worries about governance, growth prospects and its valuation. This led to the ousting of founder Adam Neumann as the CEO and its valuation suffered dramatically due to the flop.

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Two years later, WeWork went public through a combination with a special purpose acquisition company, but the enterprise continues to remain unprofitable. Its real estate footprint sprawled across 777 locations in 39 countries as of June 30, however the company’s occupancy rates are similar to those in 2019.

WeWork reached a sweeping debt restructuring deal in early 2023, but its financial status rapidly declined thereafter. In August, the company cautioned that there was a high probability of it being unable to continue operations and that it would be renegotiating nearly all its leases and leaving behind “underperforming” locations.

The pandemic has had a major impact on the co-working space, with other firms such as Knotel Inc. and IWG Plc’s subsidiaries seeking bankruptcy in 2021 and 2020 respectively.

Clearly, WeWork’s bankruptcy filing is a fresh low point for the company, as it was unable to recuperate from the Covid-19 emergency and the failed IPO in 2019.