WeWork, the shared-office company that once was valued as high as $47 billion, filed for Chapter 11 bankruptcy reorganization on Monday night.
The company said it was beginning the reorganization process in the U.S. and Canada “to rationalize its lease portfolio and position the company for sustainable, long-term growth for the benefit of all stakeholders.”
The company said during this process, WeWork spaces would remain open and operational, and there would be “no change to the way the Company operates for its members.”
Trading in shares of WeWork had been halted earlier Monday as rumors swirled that the office sharing company would seek bankruptcy protection.
Shares of WeWork, which cost more than $400 two years ago, could be had Monday for less than $1.
The specter of bankruptcy has hovered over WeWork for some time. In August, the New York company sounded the alarm over its ability to remain in business. But cracks had begun to appear several years ago.
WeWork is paying the price for aggressive expansion in its early years. The company went public in October 2021 after its first attempt to do so two years earlier collapsed spectacularly. The debacle led to the ouster of founder and CEO Adam Neumann, whose erratic behavior and exorbitant spending spooked early investors.
Japan's SoftBank stepped in to keep WeWork afloat, acquiring majority control over the company.
Despite efforts to turn the company around since Neumann's departure—including significant cuts to operating costs and rising revenue—WeWork has struggled in a commercial real estate market that has been rocked by the rising costs of borrowing money, as well as a shifting dynamic for millions of office workers now checking into their offices remotely.
In September, when WeWork announced plans to renegotiate nearly all of its leases, CEO David Tolley noted that the company's lease liabilities accounted for more than two-thirds of its operating expenses for the second quarter of this year—remaining "too high" and "dramatically out of step with current market conditions."
Last month, WeWork skipped hefty interest payments—kicking off a 30-day grace period before an event of default. And last week, WeWork disclosed a forbearance agreement with bondholders that extended negotiations by one week prior to triggering a default.