- WeWork filed for Chapter 11 bankruptcy protection in the US on Monday.
- The coworking giant was once a hot startup worth $47 billion.
On Monday, coworking giant WeWork filed for Chapter 11 bankruptcy protection in the US, marking a dramatic fall from grace for a startup that was once valued at $47 billion.
WeWork said in its announcement it has entered into a restructuring support agreement with holders representing around 92% of its secured notes. Monday's bankruptcy filing will not affect WeWork's operations outside the US and Canada, the company added.
Backed by Japanese tech investor SoftBank, WeWork is a pioneer in coworking spaces that has transformed how people work. However, the company has been roiled in financial turmoil since its plans to go public in 2019 fell through.
It eventually went public via a SPAC two years later in 2021, but has never been profitable.
On Monday, WeWork CEO David Tolley wrote an email to the company's US-based members, writing that WeWork spaces will continue with their operations and that their membership agreements will not be affected by the filing.
He added the bankruptcy protection filing will allow WeWork to continue to restructure its financial position while continuing day-to-day operations. WeWork had no further comment apart from the Monday disclosures.
Read the full email Tolley sent to its US-based members. Bold emphasis their own.
When I wrote to you just a few short weeks ago, I expressed my confidence in our future and WeWork's pledge to put our members first in everything we do. My confidence and our commitment emphatically continue today.
WeWork made the proactive decision to commence a strategic reorganization process to best position the company for future success.
As our valued members, we want you to hear directly from us that:
• WeWork is here to stay. Our spaces are open and operational, and our team is here to serve you. Throughout this process, WeWork spaces will continue to be operated to the highest standard.
• Our members are our top priority. We recognize the trust you place in us by choosing to work within our community. We remain fully committed to provide our spaces and services to you and ensure your business continuity.
• Your membership agreement will not be impacted by this process. Your membership agreement remains active and we will continue to honor our obligations under your agreement.
• As always, we will continue to communicate with you. While we continue the necessary process of working with our landlords to improve our lease portfolio, we plan to remain in the vast majority of our buildings and are committed to communicating with members first and early should we foresee potential changes.
We are undertaking this strategic reorganization by filing for protection under Chapter 11 of the U.S. Bankruptcy Code, along with recognition proceedings in Canada. Chapter 11 is a valuable legal tool that enables companies to restructure their financial position while they continue day-to-day operations in the ordinary course. For WeWork, we expect this process to best position our company for stronger operational and financial success, and best enable us to continue to deliver world-class services to our members.
We have already completed an important early step in this process by entering into a Restructuring Support Agreement with our key creditors that drastically reduces our existing funded debt, ensuring we can sustainably invest in our product offerings and workspace solutions for many years to come. You can read our full announcement here and find additional information at we.co/memberfaq to answer your most immediate questions.
Our vision for WeWork is clear and we are on a mission to continue as the leading global flexible space provider by delivering best-in-class services and products to our members.
From all of the employees of WeWork, to our more than 500,000 members around the world, thank you for your trust in us as we take these critical steps to strengthen our company for the long term.
We are grateful you're a part of our community. We do not take the opportunity to work with you for granted, and look forward to seeing you in one of our spaces again soon.
With gratitude,
David Tolley
Chief Executive Officer, WeWork