People familiar with the matter revealed on Tuesday that the shared office company WeWork plans to file for bankruptcy as early as next week. The company, which is backed by Japan’s SoftBank, is struggling with huge debts and huge losses.
WeWork shares fell 32% in after-hours trading following the news. Shares have fallen about 96% this year.
New York-based WeWork is considering filing for bankruptcy protection in the U.S. state of New Jersey, the report said, citing people familiar with the matter.
WeWork declined to comment.
Earlier on Tuesday, WeWork said it had reached an agreement with creditors to temporarily defer payments on some of its debt due to expire.
As of the end of June, WeWork had $2.9 billion in net long-term debt and more than $13 billion in long-term leases, adding to the company’s troubles amid rising borrowing costs in the commercial real estate industry.
WeWork’s bankruptcy filing would be a stunning reversal of fortunes for the company. In 2019, the company was privately valued at $47 billion, a significant loss for investor SoftBank.
WeWork has been in trouble since a planned IPO failed in 2019. Investors are skeptical of its business model of leasing properties long-term and renting them out short-term, and are concerned about its huge losses.
WeWork’s woes did not ease in the ensuing years. Eventually, the company successfully went public in 2021, but its valuation dropped significantly. Japan’s SoftBank Group, its main backer, has invested billions in the startup, but the company continues to lose money.
In August of this year, WeWork expressed “serious doubts” about its ability to continue operating, and several executives resigned, including CEO Sandeep Mathrani.
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