WeWork could be filing for bankruptcy within days
Troubled office-sharing firm WeWork may file for bankruptcy as early as next week, according to US media reports.
The firm was once seen as the future of the office. But it has been plagued by problems, including a disastrous attempt in 2019 to sell shares to the public and the exit of its co-founder.
The company was also hit hard by the pandemic, as more people started working from home.
WeWork is considering filing for bankruptcy in New Jersey, according to the Wall Street Journal, which first reported the story.
The Reuters news agency also reported the story, citing a source familiar with the matter.
In response to the reports a WeWork spokesperson said: “We do not comment on speculation.”
Earlier on Tuesday, the company told the US financial regulator it had agreed with creditors to temporarily postpone payments for some of its debt.
WeWork shares fell by more than 40% in after-hours in New York trading on Tuesday.
Jane Sydenham, investment director at Rathbones, said that WeWork had been “a great idea” when it started out.
“We all know that flexible working and being able to use offices on an ad-hoc basis is a helpful opportunity to have,” she said.
“But I think the problem with WeWork was it over-expanded, borrowed too much money, took on too many sites too quickly, didn’t really put in place all the checks and balances and controls that a company needs to have.”
Ms Sydenham added that WeWork had also been hit by the rise in interest rates, which made borrowing more expensive.
The New York-based firm has been struggling since its initial attempt to sell shares on the stock market collapsed in 2019 due to concerns about its debts, losses and management.
A week before the company confirmed that its share sale had been scrapped founder Adam Neumann stepped down as chief executive.
Scrutiny of his leadership had “become a significant distraction,” the firm said.
A few months after the listing debacle, the pandemic hit, sparking a revolution in remote work and exposing WeWork to blistering public criticism from tenants looking to escape their leases.
But the company kept operating, as executives sold off ancillary businesses, cut jobs and cancelled or modified hundreds of leases, trying to stem the firm’s losses before it ran out of money.
WeWork finally listed on the New York Stock Exchange in 2021 with a much lower valuation.
The Japanese conglomerate SoftBank has pumped tens of billions of dollars into WeWork as it continued to lose money.
The firm, which was valued at roughly $47bn (£38.7bn) at its height in early 2019, has lost almost 98% of its stock market valuation in the last year.
In August, WeWork raised “substantial doubt” about its ability to continue operations.
At the time, the company said in a statement that it faced challenges including softer demand and a “difficult” operating environment.
It has also seen the exit of several top executives this year, including chief executive and chairman Sandeep Mathrani.
As of the end of June WeWork had 777 locations in 39 countries around the world, according to the company.