WeWork, a new startup backed by SoftBank, filed for bankruptcy protection in the U.S. court on Monday (6th). Due to WeWork’s poor operating model and poor financial health, the shared office empire WeWork collapsed due to huge debts and huge losses. , and became a black hole for SoftBank’s investment losses.
Shared office operator WeWork filed for bankruptcy protection in New Jersey under Chapter 11 of the U.S. Bankruptcy Code. SoftBank, which owns about 60% of WeWork and invested billions in its transformation, admitted that unless WeWork renegotiates its expensive lease, otherwise the company would not survive.
The sharing bubble burst and WeWork filed for bankruptcy protection (Photo: WeWork official website)
WeWork profitability remains elusive as it grapples with expensive lease payments and some corporate clients canceling business as some employees work from home. In the second quarter of 2023, paying for space consumed 74% of WeWork’s revenue.
The company reported estimated assets and liabilities of between $10 billion and $50 billion each, according to a bankruptcy filing.
Cadwalader, Wickersham & Taft LLP, a law firm that advises financial institutions and businesses, said in an August note to landlords on its website: “WeWork could use provisions of U.S. bankruptcy law to extricate itself from onerous leases. ” This means some landlords are bracing for a major impact.
WeWork was once a company that pioneered the shared office movement and was also the darling of the venture capital community. WeWork founder Adam Neumann relied on his personal charm and eloquence to attract several well-known venture capital companies and entrepreneurs to invest in the company.
In 2019, WeWork received over 10 billion U.S. dollars in investment from Wall Street investment banks such as SoftBank Group, venture capital firm Benchmark, and JPMorgan Chase, and its valuation was once as high as 47 billion U.S. dollars.
As the coronavirus pandemic, soaring inflation, and the economic outlook worsened, and companies turned to remote work and cut spending, WeWork’s losses continued to grow, Neumann’s pursuit of rapid growth at the expense of profits, and the exposure of his disorderly behavior led to his 2019 After stepping down, WeWork’s stock price also plummeted.
SoftBank was forced to double its investment in WeWork and hire real estate industry veteran Sandeep Mathrani as the startup’s chief executive.
SoftBank reached an agreement in 2021 to list WeWork at a valuation of US$8 billion through a merger with a blank check acquisition company. However, WeWork’s share price has fallen 99% since it went public in 2021. The New York Stock Exchange In April this year, it even issued a delisting warning.
After CEO Sandeep Mathrani announced his resignation in May this year, the market became even less optimistic about WeWork’s subsequent development.
The results of the second quarter financial report of fiscal year 2023 show that its revenue reached US$844 million, an annual increase of 4%. At the same time, revenue in the first half of the year increased by 7% annually, but it still resulted in a loss of US$397 million. The company also stated in the financial report that in the future 12-month continuation depends on cash flow and profitability.
WeWork had three directors quit the board in August due to dissatisfaction with the company’s strategic direction, and the company subsequently restructured its debt, but it was not enough to avoid bankruptcy. The company obtained a seven-day extension on interest payments from creditors last week to buy more time to negotiate with them, but WeWork is in a terminal condition and bankruptcy is a foregone conclusion.
2023-11-07 03:16:52
#Sharing #bubble #bursts #WeWork #files #bankruptcy #protection #Anue #Juheng #Stock #Radar
