Office-sharing company WeWork on Monday filed for Chapter 11 bankruptcy protection in the United States as it undertakes a comprehensive reorganization to strengthen its capital structure and financial performance.
The bankruptcy filing is limited to WeWork’s locations in the US and Canada, the company said in a statement, adding that its franchisees around the world are similarly not affected by these proceedings.
“WeWork Inc. and certain of its entities filed for protection under Chapter 11 of the U.S. Bankruptcy Code, and intend to file recognition proceedings in Canada under Part IV of the Companies’ Creditors Arrangement Act,” the company said.
“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,” WeWork CEO David Tolley said.
“It is the WeWork community that makes us successful. Our more than half-million members around the world turn to us for the best-in-class spaces, hospitality, and technology that our 2,500 dedicated employees and valued partners provide. WeWork has a strong foundation, a dynamic business, and a bright future,” Tolley said.
WeWork was founded in 2010 to provide co-working space to companies. It soon became the global leader in providing flexible office spaces and reached a valuation of $47 billion in 2019 when Masayoshi Son’s SoftBank invested in the company.
However, the 2020 Covid-19 lockdown, which ceased economic activity worldwide significantly, affected the business and led to major losses.
The bankruptcy proceedings will enable the company to undertake a “comprehensive reorganization” to “strengthen its capital structure and financial performance and best position the Company for future success”.
The company said that maintains the strong support of its key financial stakeholders and has entered into a ‘Restructuring Support Agreement’ with holders representing approximately 92% of its secured notes to “drastically reduce the company’s existing funded debt and expedite the restructuring process”.
“Now is the time for us to pull the future forward by aggressively addressing our legacy leases and dramatically improving our balance sheet,” Tolley said.
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