WeWork Emerges From Bankruptcy

Company says it has shed more than $4B in debt
By Newser Editors and Wire Services
Posted Jun 13, 2024 3:38 AM CDT
WeWork Emerges From Bankruptcy
The WeWork logo is seen at one of the company's offices in New York.   (AP Photo/Mark Lennihan, File)

WeWork has officially emerged from bankruptcy. And all eyes are on whether its new leadership can guide the long-embattled provider of co-working office space to success. Once a Wall Street darling promising to revolutionize the world of work, WeWork took a stunning—but anticipated—fall last November when it filed for Chapter 11 bankruptcy protection. Early overexpansion shackled WeWork with mounting debt and unsustainable real estate costs, and the New York-based company turned to restructuring in a bid to resurrect its business. WeWork emerged from the restructuring, which took effect Tuesday after being finalized in court last month, as a private company, the AP reports.

That means its future financial disclosures will be limited, but the company says it's shed more than $4 billion in debt, raised $400 million of additional equity capital, and cut future lease obligations in half—which it expects to bring some $12 billion in future savings.

  • WeWork's real estate footprint also got smaller. The company exited 170 "unprofitable" locations—bringing its portfolio to about 600 wholly owned, franchisee and joint-venture locations in 37 countries. That's down from around 770 locations across 39 countries reported ahead of November's Chapter 11 filing.
  • "They rejected a great deal (of leases), so it's obviously going to put WeWork in a much better position in terms of being lean enough ... to exit bankruptcy and operate without so much crushing overhead," says John D. Giampolo at New York-based law firm Rosenberg & Estis, which represented several landlords and creditors in WeWork's bankruptcy case. Still, the future is uncertain. "Is it going to be enough so that WeWork becomes sufficiently profitable long-term? I think only time is going to tell," Giampolo says.

  • The company's new leadership is also being watched. WeWork revealed Tuesday that David Tolley has stepped down as CEO and is being replaced by John Santora of real estate company Cushman & Wakefield. Santora is the fourth permanent CEO that WeWork has seen over the last five years. WeWork also unveiled a new board of directors. More than half of the new members come from real estate software company Yardi Systems, which agreed to acquire a majority stake in WeWork during bankruptcy proceedings.
  • Commercial real estate experts like David Putro, senior vice president at Morningstar Credit Analytics, note that demand for co-working spaces remains strong but for WeWork and its competitors, having a sustainable business model and keeping up with consumers' evolving needs is crucial.
(Last month, ousted co-founder Adam Neumann dropped a bid to buy back the company.)

Get the news faster.
Tap to install our app.
Install the Newser News app
in two easy steps:
1. Tap in your navigation bar.
2. Tap to Add to Home Screen.