WeWork files for bankruptcy

WeWork has filed for bankruptcy in the US after months of speculation over how the co-working company can manage its massive debt pile. The company said it has entered into a restructuring support agreement with “strong support” from stakeholders representing 92% of its secured notes, part of borrowing which it said it aims to “drastically reduce”. “During this period, WeWork will further rationalise its commercial office lease portfolio while focusing on business continuity and delivering best-in-class services to its members, as global operations are expected to continue as usual,” the company said, adding that it “is requesting the ability to reject the leases of certain locations, which are largely non-operational and all affected members have received advanced notice”. WeWork and some of its entities have filed for Chapter 11 bankruptcy protection in the US and plan to file for similar recognition in Canada but said locations outside of those countries are not part of the process and that franchisees globally are unaffected. Paperwork lodged as part of the filing shows a total debt of close to $18.7bn (£15.2bn) and a list of creditors including major real estate names such as Nuveen, Cushman & Wakefield and Brookfield. Chief executive David Tolley said: “Now is the time for us to pull the future forward by aggressively addressing our legacy leases and dramatically improving our balance sheet. 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.” The company is filing with the court a series of customary “first-day motions” which it said will “facilitate a smooth transition into the process and to support operations throughout its cases”. WeWork has already requested that the US court gives it an extension of time, from 14 to 60 days, in which to file schedules of assets and liabilities, contracts and unexpired leases, and statements of financial affairs, claiming that “resources are strained”. “The ordinary operation of the debtors’ business requires the debtors to maintain voluminous books, records and complex accounting systems,” the relief application said. “To prepare the schedules and statements, the debtors must compile information from those books and records, and from documents relating to the claims of thousands of creditors, and the debtors’ many assets and contracts. “This information is extensive and located in numerous places throughout the debtors’ organisation. Collecting the necessary information requires an enormous expenditure of time and effort on the part of the debtors, their employees, and their professional advisors in the near term.” Asked about implications for UK operations, WeWork spokesperson said: “The UK and Ireland is, and always will be, one of our most important markets, and we are fully committed to providing our members with world-class, flexible workspace solutions for the long term. We continue to work collaboratively with our landlord partners on solutions that set all parties up for sustainable success. The proactive decision to commence a strategic reorganisation in the US will holistically address our high-cost and inflexible-lease portfolio and position the company for success.” To send feedback, e-mail tim.burke@eg.co.uk or tweet @_tim_burke or @EGPropertyNews Photo by Erik Pendzich/Shutterstock (10455631f)