WeWork, the high-flying shared office company that was once among the world’s most valuable startups, filed for bankruptcy Monday after years of deteriorating financial performance.
“To achieve its objectives, WeWork Inc. and certain of its entities have filed for protection under Chapter 11 of the United States Bankruptcy Code and intend to initiate recognition proceedings in Canada under Part IV of the Companies’ Creditors Arrangement Act (the “CCAA Recognition Act”). Procedures”),” the company said in a statement. “WeWork locations outside of the United States and Canada are not part of this process. WeWork franchisees worldwide are also not included in this process.”
WeWork’s collapse caps a surprising decline for a company that was valued at $47 billion in early 2019 after a torrent of venture capital funding from Japanese firms Softbank, Goldman Sachs, BlackRock and other top investors. order. Over time, its operating expenses soared and the company relied on repeated cash injections from private investors.
WeWork rents buildings and divides them into office spaces to sublet to its members, who include small businesses, startups and freelancers who want to avoid paying for permanent office space. However, the company began to struggle early on as millions of Americans converted to remote work and no longer needed office space when mandatory COVID-related lockdowns were in place .
WeWork said in its statement announcing the bankruptcy filing that its offices were still “open and operational.” The company said it was “requesting the opportunity to decline leases for certain sites, which are largely non-operational, adding that “all affected members have been provided with advance notice.”
In August, WeWork warned that it may not be able to survive next year due to factors including financial losses and a need for liquidity. The company also said it faces high member turnover rates.
Former WeWork founder and CEO Adam Neumann started the company in April 2011. He was ousted in September 2019.
“As a co-founder of WeWork who spent a decade building the company with an extraordinary team of mission-driven people, the company’s anticipated bankruptcy filing is disappointing,” Neumann said Monday in a statement . “It’s been a challenge for me to watch from the sidelines since 2019 as WeWork has failed to capitalize on a product that is now more relevant than ever. I believe that with the right strategy and team, a reorganization will allow WeWork to emerge successfully.”
WeWork’s downturn began in late 2019, when the company considered going public but backed out after the company revealed its losses were much greater than expected. The companyor nearly 20% of its workforce, in November 2019. WeWork finally resold its shares to the public in 2021.