Bankruptcy finally came for WeWork. After months of rumors in the American press, the company that provides shared spaces for work, the so-called coworking, has filed for bankruptcy under Chapter 11 of the US bankruptcy law. A procedure that allows companies to block any initiatives by creditors to attempt a debt restructuring. This is one of the most thunderous and sudden collapses of recent years. The request, filed in New Jersey, is valid for the United States and Canada.
It’s Italy?
Europe and Italy will not be affected by bankruptcy at the moment. A WeWork spokesperson says: «The activities in Italy are not part of this process and remain operational. Globally, we continue to take steps to strengthen our company. WeWork is here to stay and we plan to remain in most markets well into the future.”
The beginning of the crisis
But how did the coworking giant’s crisis begin? In 2019 alone, WeWork boasted the largest number of offices in all of Manhattan and had a valuation of 47 billion dollars. As Francesco Bertolino explains, the expansion was financed by the capital of the Japanese giant Softbank «which managed to invest one billion dollars in 2019 in the company, and from the debt, which at the end of June stood at 2.9 billion dollars. The model worked as long as interest rates remained at zero, allowing WeWork to continually raise funds to cover losses, and as long as startups showed interest in shared workspaces.”
Bankruptcy
The bankruptcy comes after financial difficulties that began in 2019 and amplified during the pandemic. In fact, in the space of a few months, the company went from planning the IPO (the listing will come two years later) to the dismissal of thousands of people. The coronavirus pandemic has aggravated the situation with the explosion of smart working and the need to work remotely. By August 2023 WeWork had already raised “substantial” doubts about its ability to remain operational.
What happens now
After the bankruptcy news, the company announced that, except for operations in the United States and Canada, “global operations will continue as usual.” In a statement, CEO David Tolley wrote: “Now is the time for us to move forward into the future by aggressively addressing our legacy leases and significantly improving our balance sheet.” According to court documents, WeWork has $15 billion in assets and $18.6 billion in debt. However, the numbers of the collapse remain merciless: since its debut on the NYSE in 2021, the stock has lost around 98% of its value. And today it is worth just over 100 million.
2023-11-07 15:28:38
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