Office-sharing company WeWork, once a most valued US startup, filed for Chapter 11 bankruptcy protection in New Jersey federal court on November 6, CNBC International reported on November 7. The firm, valued at $47 billion in 2019, said it had entered into agreements with the vast majority of its secured note holders and that it intended to trim “non-operational” leases.

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WeWork CEO David Tolley, in a press statement, 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.”

The statement clarifies that the bankruptcy filing is limited to WeWork’s locations in the US and Canada.

The company has reported liabilities ranging from $10 billion to $50 billion, according to the bankruptcy filing cited by CNBC.

Trading in shares of WeWork were halted on November 6 amid then rumours that the company was going to seek bankruptcy protection.

SoftBank-backed WeWork suffered massive corporate collapses over the past few years. Valued in 2019 at $47 billion in a round led by Masayoshi Son’s SoftBank, the company tried and failed to go public five years ago.

Profitability remained elusive as WeWork grappled with its expensive leases and corporate clients cancelling because some employees work from home. Paying for space consumed 74% of WeWork's revenue in the second quarter of 2023. As per the bankruptcy filing, the company reported estimated assets and liabilities ranging from $10 billion to $50 billion.

WeWork's India business, however, remains unaffected.

WeWork India CEO Karan Virwani has clarified that WeWork India operates independently of WeWork Global, and therefore its operations will not be affected in any manner due to the “strategic reorganisation process in the US, along with recognition proceedings in Canada”.

“The Chapter 11 filing does not impact the operations of the global entity as it continues to remain in possession of its business, operating as usual. The process restructures the debts and the leases of WeWork Global in the US and Canada. During this period, we will continue to hold the rights to use the brand name as part of the operating agreement, while serving our members, landlords, and partners as usual,” Virwani said in a statement.

“We are backed by the Embassy Group which holds the majority stake and control to run and operate the business in India. We have achieved consistent and sustainable growth, operationally and financially,” he said.

(With inputs from Reuters)

(Edited by : Amrita)

First Published:Nov 7, 2023 8:56 AM IST