San Francisco: Leading flexible workspace provider WeWork, once valued at $47 billion, is reportedly filing for bankruptcy as early as next week, a move that is likely to hit the co-working real estate market.
According to a Wall Street Journal report, citing sources, the flexible-office-space provider is now preparing for chapter 11 protection in the state of New Jersey.
The WSJ report said that WeWork, after defaulting on interest payments on October 2, is considering filing for bankruptcy.
A company spokesperson reportedly called it “speculation”.
The company’s stock plunged more than 42 per cent on Tuesday, trading at just $2.2, after the report about it going bankrupt came out.
Overall, WeWork’s stock was down 85 per cent since the start of 2023.
WeWork on Tuesday said it has entered into a seven-day forbearance agreement with its noteholders after skipping interest payments earlier this month.
Earlier this month, WeWork missed interest payments to its bondholders, and was granted 30 days to come up with those payments, according to a securities filing.
On October 30, WeWork said it had begun discussions with “certain stakeholders in its capital structure” such as SoftBank and Goldman Sachs about improving its balance sheet as it took steps “to rationalise its real estate footprint”.
WeWork, struggling to survive in a post-pandemic world, said during its earnings call in August that “substantial doubt exists about the company’s ability to continue as a going concern”.
The company, which reported a net loss of $397 million for the second quarter over the consolidated revenue of $844 million (up 4 per cent year-over-year) in its second quarter, projected a weak future amid losses, projected cash needs and increased member turnover.
“Excess supply in commercial real estate, increasing competition in flexible space and macroeconomic volatility drove higher member churn and softer demand than we anticipated, resulting in a slight decline in memberships,” WeWork interim CEO David Tolley had said.
WeWork had raised over $22 billion in funding from investors such as SoftBank, Insight Partners, BlackRock and Goldman Sachs.
As of June 30, WeWork’s real estate portfolio consisted of 777 locations across 39 countries, supporting approximately 906,000 workstations and 653,000 physical memberships.
–IANS