WeWork, once a $47bn firm, files for bankruptcy

WeWork Inc., a high-flying startup, has filed for chapter 11 bankruptcy, according to a statement by the company. This flexible office space startup was co-founded by Adam Neumann and was bankrolled by SoftBank, BlackRock, and Goldman Sachs. This marks a fresh low for the co-working company that has struggled and tried to recover from the pandemic and its failed initial public offering in 2019. WeWork listed both assets and liabilities in the range of $10 billion to $50 billion in a Chapter 11 petition filed in New Jersey. The filing allows WeWork to keep operating while it works out a plan to repay its debts.

WeWork, which was once valued at $47bn on the private market, had to suffer a 98% decline in its share price this year, leaving it with a market capitalization of less than $50m. In August, it raised “substantial doubt” that it could continue to operate as it grappled with $2.9bn in net long-term debt and more than $13bn in long-term leases. The company said in a statement it had entered into a restructuring support agreement and would deal with the debt by “addressing our legacy leases and dramatically improving our balance sheet”.

WeWork’s real estate footprint sprawled across 777 locations in 39 countries as of June 30, with occupancy near 2019 levels. But the enterprise remains unprofitable.
WeWork had to go public through a traditional initial public offering (IPO) but faced a series of challenges leading up to its planned IPO in 2019. As a result, WeWork was in a precarious financial situation, and its co-founder and CEO, Adam Neumann, faced increasing scrutiny and criticism. The company's valuation had been as high as $47 billion at one point, but the failed IPO had a significant impact on its perceived value.

The company went public in 2021 through a combination with a special purpose acquisition company, two years after its planned IPO was infamously scuttled amid investor concerns about the company’s governance, valuation and growth prospects. The failed deal led to founder Adam Neumann’s resignation as chief executive officer.

Other shared office space firms have also stumbled after the pandemic upended working habits. Knotel Inc. and subsidiaries of IWG Plc sought bankruptcy in 2021 and 2020, respectively.
The saga of WeWork's IPO is indeed a notable example of a high-profile IPO attempt that didn't go as planned and faced various controversies and setbacks.