WeWork goes bankrupt, capping co-working company’s downfall

WeWork Inc. has filed for bankruptcy marking the fresh low for the co-working company that was once valued as high as US$47 billion. The New York-based company filed for Chapter 11 protection in New Jersey, listing both assets and liabilities in the range of US$10 billion ($13.5 billion) to US$50 billion. This allows WeWork to keep operating while it works out a plan to repay its debts.

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In 2019, WeWork failed to complete its initial public offering, leading to the resignation of Adam Neumann as CEO and a dramatic drop in its valuation. In 2021, it was able to go public through a combination with a special purpose acquisition company, however the enterprise remains unprofitable.

The company has a large real estate footprint spanning 777 locations in 39 countries, with occupancy levels close to what they were when it planned to go public. However, despite this, in August 2021 it said there was “substantial doubt” about its ability to sustain. Weeks later, it said it would be renegotiating all its leases and withdrawing from “underperforming” locations.

The pandemic has proven a difficult time for other shared office space companies, such as Knotel Inc. and subsidiaries of IWG Plc, who both sought bankruptcy in 2021 and 2020 respectively.

However, other real estate firms such as CICT and CDL are unaffected by the bankruptcy warning, as both continue to remain strong and abreast of current office-use trends. For example, WeWork has recently unveiled a new 21-storey flagship centre at 21 Collyer Quay.

WeWork’s bankruptcy marks a fresh low for a company that once had such high potential, and it remains to be seen how the company moves forward as it works out a plan to repay its debts.