WeWork, the provider of shared office spaces, is reportedly on the verge of declaring bankruptcy. The company has announced to the US financial regulator that it has reached an agreement with its creditors to temporarily defer payments on some of its debts. The Wall Street Journal, citing informed sources, reported that WeWork is preparing to file for bankruptcy with creditor protection as early as next week. Following this news, the company’s shares plummeted by more than 40 percent.
WeWork became a prime example of wildly overvalued American start-ups a few years ago, according to the DPA news agency. The company recently encountered problems again – in August, it admitted to having significant doubts about its future existence, citing losses and an expected need for funds.
On Tuesday, WeWork announced that it had reached an additional weekly deferral agreement with its supporters for further negotiations. When the company failed to repay its outstanding amount at the beginning of October, a 30-day grace period began, after which a decision could be made on its insolvency.
WeWork’s business model is to rent shared office spaces with shared infrastructure to aspiring entrepreneurs in so-called co-working spaces. Thanks to clever marketing, the company’s founders attracted sponsors who invested $47 billion (over a trillion Czech crowns) into the company.
WeWork wanted to go public in 2019, aiming to become one of the most valuable start-ups. However, the company faced a setback as a deep insight into its business in the prospectus for the initial public offering (IPO) caused major investors to steer clear of its losses. The pandemic further hit the company hard as COVID-19 measures forced people to work from home instead of shared spaces.
In 2021, WeWork went public, but only through a merger with a special purpose acquisition company (SPAC). Even now, the company’s stock price is valued at approximately $120 million.
WeWork has a branch in Prague, located in the Drn office center on Národní třída.
What factors led to WeWork’s financial instability and potential bankruptcy filing?
WeWork, the renowned provider of shared office spaces, is reportedly on the brink of filing for bankruptcy. Recently, the company revealed to the US financial regulator that they have successfully negotiated an agreement with their creditors.
Wow, this is a major blow for WeWork. They seemed unstoppable not too long ago.