Co-working space firm WeWork sought US bankruptcy protection on Monday. This comes after its bets on companies using more of its office-sharing space soured.
In a statement, the SoftBank Group-backed start-up said it has entered into a restructuring agreement with key financial stakeholders to "drastically reduce" its existing funded debt, and also intended to file recognition proceedings in Canada.
The company's locations outside of the US and Canada, as well as its franchisees around the world, are not affected by these proceedings, it added.
“Now is the time for us to pull the future forward by aggressively addressing our legacy leases and dramatically improving our balance sheet,” WeWork CEO David Tolley said in a statement.
“We defined a new category of working, and these steps will enable us to remain the global leader in flexible work. I am deeply grateful for the support of our financial stakeholders as we work together to strengthen our capital structure and expedite this process through the Restructuring Support Agreement. We remain committed to investing in our products, services, and world-class team of employees to support our community," Tolley added.
Under its founder Adam Neumann, WeWork grew to be the most valuable US startup worth $47 billion. It attracted investments from bluechip investors, including SoftBank and venture capital firm Benchmark, as well as the backing of major Wall Street Banks, including JPMorgan Chase.
SoftBank was forced to double down on its investment in WeWork, and tapped real estate veteran Sandeep Mathrani as the startup's CEO. In 2021, SoftBank cut a deal to take WeWork public through a merger with a blank-check acquisition company at an $8 billion valuation.
WeWork managed to amend 590 leases, saving about $12.7 billion in fixed lease payments. But this was not enough to compensate for the fallout from the COVID-19 pandemic, which kept office workers at home.
(With Reuters inputs)
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