The move represents an admission by SoftBank that the firm cannot survive unless it renegotiates its pricey leases in bankruptcy
WeWork, the SoftBank Group-backed startup whose sharp rise and fall reshaped the office sector globally, sought U.S. bankruptcy protection on Monday after its speculations on firms using more of its office-sharing space soured.
The move represents an admission by SoftBank, the Japanese technology group that owns nearly 60 per cent of WeWork and has invested billions of dollars in its turnaround that the firm cannot survive unless it renegotiates its pricey leases in bankruptcy.
A WeWork spokesperson said around 92 per cent of the firm’s lenders had agreed to convert their secured debt into equity under a restructuring support agreement, wiping out nearly $3bln of debt.
The firm, which also intends to file recognition proceedings in Canada, said it expected to have the financial liquidity to continue business normally and that its locations outside of the U.S. and Canada, as well as its franchisees around the world, were not impacted by these proceedings.
WeWork had office space available at 777 locations globally as of the end of June.
SoftBank said it believed WeWork’s restructuring support agreement was the proper action for the firm to reorganize its business and emerge from Chapter 11 proceedings.
SoftBank will continue to act in the best long-term interests of our investors, the Japanese firm said in a statement.
WeWork shares have dropped nearly 98.5 per cent so far in 2023.
Profitability has remained elusive, as WeWork struggles with expensive leases and corporate clients cancelling because of a trend toward employees working from home. Paying for space consumed 74 per cent of WeWork’s revenue in Q2 2023, the last time it reported financial results.
In a filing with the New Jersey bankruptcy court, WeWork listed assets of $15.06bln and liabilities of $18.66bln as of June 30.
WeWork could use provisions of the U.S. bankruptcy code to rid itself of onerous leases, law firm Cadwalader, Wickersham & Taft LLP said in a note to landlords on its website in August. Some landlords are bracing for a significant impact.