A US bankruptcy judge approved WeWork’s Chapter 11 bankruptcy plan, enabling the struggling shared office space provider to eliminate $4bn of debt and handing control over to a group of lenders and real estate tech firm Yardi Systems.
Days after Adam Neumann, co-founder and ex-CEO, confirmed he had shelved a bid to buy the business, WeWork said it expected to emerge from bankruptcy next month.
The company claimed it was now positioned for “sustainable, profitable growth”, raising the prospect of it breaking even after years of steep losses.
WeWork used its bankruptcy to negotiate a significant reduction in future rent costs from its landlords, ultimately reaching deals to save $8bn in future rent costs. The company also canceled leases at about 160 of its 450 locations during bankruptcy.
David Tolley, CEO, said: “In one of the largest and most complex restructurings, we have achieved extraordinary outcomes. Over the last year, we have also seen strong demand across the WeWork system and increased our member net promoter scores.”
WeWork filed for Chapter 11 bankruptcy protection last November in order to renegotiate these agreements.
At its peak, the company had been valued at $47bn as investors including the Japanese multinational SoftBank lined up to back it. As it prepared to go public in 2019, however, analysts gave it a far lower valuation.
After it eventually went public, in 2021, its market valuation tumbled to less than $50m.
Neumann, 45, stepped down from WeWork in 2019 after its initial failure to go public, and criticism of the firm’s internal culture on his watch. He landed on his feet, however, launching Flow – a real estate venture which raised $350m from the Silicon Valley venture capital firm Andreessen Horowitz in 2022.
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As Neumann and Flow sought to buy WeWork, his former company said he failed to offer a high enough price to win over the company’s lenders, who preferred to take an equity stake as part of the bankruptcy deal.
Reuters contributed reporting