WeWork on Tuesday said it aims to emerge from Chapter 11 bankruptcy protection in the U.S. and Canada by May 31, and will receive 80% of its rent commitments from landlords. The company announced that it had negotiated a reduction of more than $100 million.
The shared office space provider, once privately valued at $47 billion, filed for bankruptcy in November after racking up losses on long-term leases as demand for office space plummeted due to the pandemic and the shift to hybrid work. I applied.
The SoftBank-backed company’s post-bankruptcy business plan assumes future rent costs from landlords will be significantly reduced.
The company announced on Tuesday that it has agreed to improve the economic terms of approximately 150 leases, including reducing rent payments, and is in the process of canceling an additional 150 leases. The company plans to keep 150 leases unchanged and is negotiating with landlords for about 50 more locations.
WeWork’s lease negotiations allow WeWork to emerge from bankruptcy as a leaner company amid continued uncertainty in the commercial real estate market, said Peter Greenspan, WeWork’s global head of real estate. The company says it is ready to provide workspaces that benefit both employers and landlords.
“The need for these types of services and spaces is only going to grow, so now is a good time to go through this process with landlords and rethink how to monetize this office space that is traditionally filled with long-term leases. ” Greenspan said in an interview.
Greenspan said WeWork didn’t exit any regional markets when it cut back on its leases, instead pulling out of some cities like New York where the company was growing too fast or not in its core. He also experimented with products other than the Naru coworking space business.
WeWork reached an agreement in November with more than 90% of its bondholders to convert $3 billion in debt into equity. SoftBank currently owns approximately 70% of the company, and will continue to hold shares in this reorganization plan.
Meanwhile, WeWork co-founder Adam Neumann has submitted a bid of more than $500 million to buy back the company, but the funding process is currently unclear. WeWork declined to comment on Mr. Neumann’s specific bid, saying it receives and considers “regular expressions of interest from third parties.”
Under Newman, WeWork rapidly expanded to become the most valuable startup company in the United States. But his pursuit of growth at the expense of profits and revelations of his erratic behavior led to his firing and the company’s initial public offering in 2019 fell through.
