WeWork valued at just $50m as it files for bankruptcy

The office-sharing firm once valued at $47bn (£38bn) sinks in value as it is forced to file for bankruptcy in the US.

The story of the meteoric rise and fall of WeWork has come to an end, as the SoftBank Group-backed start-up has filed for bankruptcy in the US as a means of grappling with debts of billions of dollars.

With its provision of shared working space, WeWork was once seen as the future of the workplace. The company, once valued at $47bn (£38bn), is now worth less than $50m (£41m), based on its latest share price.

The filing is expected to give the company protection from its creditors and landlords as it restructures its vast debts. A WeWork spokesperson said about 92 per cent of the company’s lenders had agreed to convert their secured debt into equity under a restructuring support agreement.

WeWork has more than 700 sites around the world and around 730,000 members, but the bankruptcy filing will only affect the company’s business in the US and Canada, with the company stating that its spaces in other countries – including the UK – will remain open and operational.

“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,” said David Tolley, WeWork CEO. “We remain committed to investing in our products, services and world-class team of employees to support our community.”

WeWork was founded in 2010 by Adam Neumann. The company was seen as a pioneer of new ways of working, as it leased office spaces that workers and companies could rent based on their needs. Its success attracted investments from SoftBank, Benchmark and JPMorgan Chase, among others. 

However, in 2019 WeWork suffered a disastrous public listing. The process was so damaging to the company’s reputation that Neumann was ousted from the firm. Covid-19 lockdowns also left many of WeWork’s spaces empty, hurting revenue streams. 

In 2021, SoftBank cut a deal to take WeWork public through a merger with a blank-cheque acquisition company. The agreement valued WeWork at $8bn (£6.5bn).

However, this was not enough to keep the company afloat and, in the first half of 2023, WeWork reported losses of over $1bn (£814m), in which office leases amounted to the largest expense. Last month, the company told investors it was not making payments on its loans.

Neumann has said it has been “challenging” for him to watch the company’s downfall, stressing that it has failed to take advantage of “a product that is more relevant today than ever before”.

“I believe that, with the right strategy and team, a reorganisation will enable WeWork to emerge successfully,” he added.

SoftBank said WeWork’s restructuring support agreement was the appropriate action for the company, and added it would “continue to act in the best long-term interests of our investors.”

The company has reported liabilities ranging from $10bn (£8bn) to $50bn (£40.7bn), according to a bankruptcy filing. In 2023 alone, WeWork shares have fallen by 98.5 per cent.

Image credit | Fizkes/Dreamstime