The American shared office giant WeWork, in great difficulty for several years, announced on Monday November 6 that it was filing for bankruptcy in order to negotiate a “significant” reduction in its debt with its creditors.
“WeWork and certain of its subsidiaries have commenced Chapter 11 [bankruptcy] proceedings and intend to file recognition proceedings in Canada under the Commercial Bankruptcy Agreements Act. companies and creditors,” the group announced in a press release. The procedure does not concern its subsidiaries outside these two countries, added the group, which believes that its “global operations will continue, as usual”.
The chapter 11 procedure allows a company to renegotiate its debt with its creditors as well as to present a plan to reorganize its activity while remaining under the protection of the law, for a period which can extend over several years. The group hopes in particular, through this procedure, to “end the leases of a certain number of locations” which do not bring it enough money, specifying that the owner companies “have already received notice”.
“It is time for us to look to the future by vigorously tackling our old leases and significantly improving our balance sheet,” said the group’s managing director, David Tolley, quoted in the press release, for whom “these measures will enable us to remain the global leader in flexible workspace.”
Billions of euros lost
WeWork had warned the American stock market watchdog (SEC) in early August that it feared for its survival: “There is substantial doubt about the company’s ability to continue its activities,” he declared. The cause, according to the company: financial losses, liquidity needs and the drop in the number of tenants. It explained that it had lost billions of dollars during the first six months of 2023, due to the drop in demand linked to poor economic conditions.
The fate of New York-headquartered WeWork depends on “the successful execution of management’s plan to improve the company’s liquidity and profitability,” the company said in an SEC filing. .
The S rating agency
“In our view, this constitutes a partial default on several tranches of its capital structure because WeWork is in dire straits, has not fulfilled its contractual obligations by paying interest on time and has not adequately compensated adequate all creditors for having temporarily waived their rights”, explained S
Rise of teleworking
Once a start-up star, WeWork has raised billions of dollars from SoftBank Group. But the controversial management of its founder, Adam Neumann, worried investors, who ended up ousting him in 2019. Then the pandemic emptied the offices and the company failed to recover as demand for of professional premises has fallen with the rise of teleworking.
The fall of WeWork also greatly destabilized the Japanese group SoftBank Group and its Vision Fund, which had invested heavily in it, even forcing the Japanese group to save it for the first time at great expense, in the process damaging the visionary image of WeWork. his boss, Masayoshi Son
The group was valued at up to $47 billion but its stock was worth only 80 cents (75 euro cents) Monday evening at the close of the New York Stock Exchange, for a market capitalization of $44.49 million. dollars.