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HomeFinance & InvestingBusinessWeWork files for bankruptcy after years of losses

WeWork files for bankruptcy after years of losses

WeWork, the co-working company that was once valued at $47 billion, said Monday that it has filed for Chapter 11 protection, three months after warning investors that it was at risk of bankruptcy.

In a statement, WeWork said it had also filed for similar protection in Canada, and had agreed to a restructuring plan backed by 92 percent of its creditors that would involve reducing its portfolio of commercial office leases. The move will not affect its locations outside the United States and Canada, the company said.

WeWork will focus “on business continuity and delivering best-in-class services to its members, as global operations are expected to continue as usual,” it said.

The decision reflects years of staggering financial losses and WeWork’s drawn-out struggles to fill office spaces, which were worsened by the coronavirus pandemic.

WeWork warned that it was at risk of bankruptcy in August after recording a net loss of $700 million in the first six months of the year and $10.7 billion in net losses in the previous three years. Weeks later, David Tolley, its interim chief executive, said WeWork would renegotiate “nearly all” of its leases to cut costs.

Last week, credit ratings agencies S&P Global Ratings and Fitch downgraded WeWork’s ratings after the company failed to meet interest payments that were due in early October. Fitch said WeWork has projected growth and cost reductions that would lead to break-even results in 2021 and 2022, but that WeWork’s performance had been “consistently worse than projections.”

WeWork is “still burning cash,” despite recent cost-saving moves through “reduced head count and lease terminations,” Fitch said.

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Amit Ghosh
Amit Ghosh


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