WeWork, the office-space-sharing company once touted as the nation’s most valuable startup, filed for bankruptcy Monday as it struggles under pricey leases and a slump in demand.
The company filed for chapter 11 protection in the U.S. Bankruptcy Court in New Jersey on Monday night. In a filing Tuesday, WeWork asked a court to approve the rejection of 69 commercial real estate leases described in filings as “underperforming.”
WeWork has more than 700 locations in 34 countries, according to court filings.
“Now is the time for us to pull the future forward by aggressively addressing our legacy leases and dramatically improving our balance sheet,” WeWork CEO David Tolley said Monday in a statement.
“We defined a new category of working, and these steps will enable us to remain the global leader in flexible work.”
The company said it was working to cut down its spending on rent when the coronavirus pandemic wreaked havoc on commercial real estate. Health-related precautions, including a push for employees to work from home, further disrupted the company.
However, the company was optimistic on Monday, with a spokesperson telling The Associated Press, “Our spaces are open and there will be no change to the way we operate.”
“We plan to stay in the vast majority of markets as we move into the future and remain committed to delivering an exceptional experience and innovative flexible workspace solutions for our members,” the spokesperson said.
In court filings, WeWork said it has amended nearly 600 leases and taken other steps that have cut its future rent obligations by more than $12 billion. The company also said 92% its lenders agreed to a restructuring support agreement that reduces WeWork’s debt by about $3 billion.
Before WeWork filed for bankruptcy, Japan’s SoftBank invested billions to help turn the company — which was valued at $47 billion in 2017 — around. About 56% of the WeWork’s shares outstanding are owned by subsidiaries of SoftBank’s Vision Fund, The Wall Street Journal reported, citing court papers.
“SoftBank will continue to act in the best long-term interests of our investors,” company officials said in a statement obtained by Reuters.
WeWork said it also plans to file recognition proceedings in Canada. Locations outside the U.S. and Canada are not part of the bankruptcy, and the company said its franchisees worldwide “are similarly not affected by these proceedings.”