Tuesday, May 28, 2024
HomebusinessWeWork plans to file for bankruptcy as early as next week: Source

WeWork plans to file for bankruptcy as early as next week: Source

WeWork plans to file for bankruptcy as early as next week, a source familiar with the matter said on Tuesday (Oct 31), as the SoftBank Group-backed company struggles with a massive debt pile and hefty losses.

Shares of the flexible workspace provider fell 32 per cent in extended trading after the Wall Street Journal first reported the news. They have fallen roughly 96 per cent this year.

New York-based WeWork is considering filing a Chapter 11 petition in New Jersey, the WSJ reported, citing people familiar with the matter.

WeWork declined to comment.

Earlier on Tuesday, WeWork said it had entered into an agreement with creditors for temporary postponement of payments for some of its debt, with the grace period nearing an end.

The company had net long-term debt of US$2.9 billion as of June end and more than US$13 billion in long-term leases, at a time when rising borrowing costs are hurting the commercial real estate sector.

WeWork’s filing for bankruptcy would mark a stunning reversal of fortune for the company that was privately valued at US$47 billion in 2019 and a black spot for investor SoftBank that sunk billions.

The company has been in turmoil ever since its plans to go public in 2019 imploded following investors’ scepticism over its business model of taking long-term leases and renting them for the short term and worries over its hefty losses.

WeWork’s woes did not abate in subsequent years. It finally managed to go public in 2021 at a much-reduced valuation. Its major backer, Japanese conglomerate SoftBank, sunk tens of billions to prop up the startup, but the company has continued to lose money.

WeWork raised “substantial doubt” about its ability to continue operations in August, with numerous top executives, including CEO Sandeep Mathrani, departing this year.

Responding to queries on how the company’s operations in Singapore will be affected, WeWork Singapore told CNA that it does not comment on speculation. 

“WeWork Singapore remains committed to providing members with exceptional office space and services throughout the region,” it said. 

A check on its website showed that it has 14 locations in Singapore. 

Related:

WeWork begins to renegotiate leases globally, plans to exit 'unfit' locations
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