WeWork announced Monday that it has filed for Chapter 11 bankruptcy protection as the office-sharing company looks to drastically reduce its debt and continue operations during the restructuring process.
The New York-based company said it has secured $1.5 billion in debtor-in-possession financing from senior secured noteholders to aid operations during the proceedings. WeWork said the financing, along with cash on hand, is expected to provide enough liquidity to support the business.
“Now is the time for us to pull the future forward by aggressively addressing our legacy leases and dramatically improving our balance sheet,” said David Tolley, CEO of WeWork, in a statement. “We defined a new category of working, and these steps will enable us to remain the global leader in flexible work.”
WeWork has entered into a restructuring support agreement with holders of approximately 92% of its senior secured notes to reduce its debt and complete the restructuring. Under the agreement, WeWork will look to exit leases and rationalize its global real estate portfolio.
“It is the WeWork community that makes us successful. Our more than half-million members around the world turn to us for the best-in-class spaces, hospitality, and technology that our 2,500 dedicated employees and valued partners provide,” Tolley said.
WeWork said it has filed a series of “First Day Motions” to support its transition into Chapter 11. The company said it expects operations to continue as usual at its U.S. and international locations. WeWork has more than 800 office location in over 150 cities around the world.
“WeWork has a strong foundation, a dynamic business, and a bright future,” Tolley said.
The bankruptcy filing comes after WeWork withdrew its initial public offering in September, which resulted in co-founder Adam Neumann stepping down as CEO. The company was privately valued at $47 billion in January but failed to drum up investor excitement for an IPO.
SoftBank Group Corp., WeWork’s majority owner, and its Vision Fund have already committed more than $10 billion to the company. SoftBank said in a statement that it expects to own approximately 80% of WeWork shares after providing the financing package.
WeWork said its locations in China, Japan, India and other countries are operated through franchisees and not impacted by the Chapter 11 filing. WeWork had $4.54 billion in losses in 2018 as it expanded rapidly.
