WeWork planning to file for bankruptcy as early as next week

The company had net long-term debt of $2.9bn (€2.75bn) as of June end and more than $13bn (€12.3bn) in long-term leases, at a time when rising borrowing costs are hurting the commercial real estate sector. (Photo by Drew Angerer/Getty Images)

WeWork plans to file for bankruptcy as early as next week, a source familiar with the matter said on Tuesday, as the SoftBank Group-backed company struggles with a massive debt pile and hefty losses.

Shares of the flexible workspace provider fell 32% in extended trading after the Wall Street Journal first reported the news. They have fallen roughly 96% this year.

New York-based WeWork is considering filing a Chapter 11 petition in New Jersey, the WSJ reported, citing people familiar with the matter.

WeWork declined to comment.

Earlier on Tuesday, WeWork said it had entered into an agreement with creditors for temporary postponement of payments for some of its debt, with the grace period nearing an end.

The company had net long-term debt of $2.9bn (€2.75bn) as of June end and more than $13bn (€12.3bn) in long-term leases, at a time when rising borrowing costs are hurting the commercial real estate sector.

WeWork's filing for bankruptcy would mark a stunning reversal of fortune for the company that was privately valued at $47bn (€44.5bn) in 2019 and a black spot for investor SoftBank that sunk billions.

The company has been in turmoil ever since its plans to go public in 2019 imploded following investors' scepticism over its business model of taking long-term leases and renting them for the short term and worries over its hefty losses.

WeWork's woes did not abate in subsequent years. It finally managed to go public in 2021 at a much-reduced valuation. Its major backer, Japanese conglomerate SoftBank, sunk tens of billions to prop up the startup, but the company has continued to lose money.

WeWork is one of Dublin's largest commercial tenants, with space at the 2 Dublin Landings building in the docklands as well as on Harcourt Road and the Charlemont Exchange by the Grand Canal.

WeWork raised "substantial doubt" about its ability to continue operations in August, with numerous top executives, including CEO Sandeep Mathrani, departing this year.

Reuters