WeWork files for bankruptcy protection
WeWork, the SoftBank Group -backed startup whose meteoric rise and fall reshaped the office sector globally, sought US bankruptcy protection on Monday, after its bets on companies using more of its office-sharing space soured. The move represents an admission by SoftBank, the Japanese technology group that owns about 60 percent of WeWork and has invested billions of dollars in its turnaround, that the company cannot survive unless it renegotiates its pricey leases in bankruptcy. WeWork China said it would not participate in the strategic reorganisation of WeWork in the United States and Canada. WeWork China is not a branch or unit of WeWork, it said in a statement on WeChat, adding the company has independent operations and management capabilities. Profitability has remained elusive as WeWork grapples with its expensive leases and corporate clients cancelling because some employees work from home. Paying for space consumed 74 percent of WeWork's revenue in the second quarter of 2023. The company reported estimated assets and liabilities ranging from US10 billion to US$50 billion, according to a bankruptcy filing. "WeWork could use provisions of the US bankruptcy code to rid itself of onerous leases," law firm Cadwalader, Wickersham & Taft LLP said in a note to landlords on its website in August. Some landlords are bracing for a significant impact. Under its founder Adam Neumann, WeWork grew to be the most valuable US startup, worth US$47 billion. Neumann's pursuit of growth at the expense of profits, and revelations about his behaviour, led to his ouster and the derailment of an initial public offering in 2019. WeWork managed to amend 590 leases, saving about US$12.7 billion in fixed lease payments. But this was not enough to compensate for the fallout from the Covid-19 pandemic, which kept office workers at home. (Reuters)_____________________________
Last updated: 2023-11-07 HKT 11:35 