Shared office giant WeWork files for bankruptcy in North America

The American shared office giant WeWork, in great difficulty for several years, announced on Monday, November 6, that it would file for bankruptcy in order to negotiate a reduction “significant” of its debt with its creditors.

“WeWork and certain of its subsidiaries have engaged [aux Etats-Unis] a “Chapter 11” protection procedure [la loi sur les faillites] and intend to file recognition proceedings in Canada under the Business Creditors Agreements Act”, announced the group in a press release. The procedure does not concern its subsidiaries outside these two countries, added the group, which considers that its “global operations will continue as usual”.

The American procedure under Chapter 11 allows a company to renegotiate its debt with its creditors as well as to present a plan to reorganize its activity while remaining under the protection of the law, for a period which can extend over several years. The group hopes in particular “terminate the leases of a certain number of locations” which do not bring in enough money, specifying that the owner companies “have already received notice”.

“It is time for us to look to the future by aggressively tackling our legacy leases and significantly improving our balance sheet”affirmed the group’s general manager, David Tolley, quoted in the press release, for whom “These measures will allow us to remain the world leader in flexible workspace”.

Billions of dollars lost in the first half of 2023

WeWork warned the American stock market watchdog (SEC) in early August that it feared for its survival: “There is substantial doubt about the company’s ability to continue as a going concern”, the group declared. The cause, according to him: financial losses, liquidity needs and the drop in the number of tenants. WeWork had explained that it had lost billions of dollars during the first six months of 2023, due to the drop in demand linked to poor economic conditions.

The fate of the company, headquartered in New York, depends on “successful execution of management’s plan to improve liquidity and profitability”she explained in a document filed with the SEC.

The S&P rating agency announced on 1^er November, lower the group’s rating in the “partial default” category, after WeWork took stock of its problems with paying interest on its debt. “In our view, this constitutes a partial default on several tranches of its capital structure because WeWork is in dire straits, has not fulfilled its contractual obligations by paying interest on time and has not adequately compensated. adequate all creditors for having temporarily waived their rights”S&P explained in a press release.

Rise of teleworking

Once a start-up star, WeWork had raised billions of dollars from SoftBank Group. But the controversial management of its founder, Adam Neumann, worried investors, who ended up ousting him in 2019. Then the Covid-19 pandemic emptied the offices and the company was unable to recover. that demand for professional premises has fallen with the rise of teleworking.

The fall of WeWork also greatly destabilized the Japanese group SoftBank Group and its Vision Fund, which had invested heavily in it, even forcing the Japanese group to save it for the first time at great expense, in the process damaging the visionary image of WeWork. his boss, Masayoshi Son

WeWork was valued at up to $47 billion but its stock was only worth 80 cents (75 euro cents) on Monday evening at the close of the New York Stock Exchange, for a market capitalization of $44.49 million. of dollars.