The troubled office-sharing company WeWork might file for bankruptcy soon, as per reports from US media outlets. WeWork has refrained from offering comments on these reports when approached by the BBC.
On Tuesday, the company informed the US financial regulator about its agreement with creditors to temporarily defer payments for some of its debts.
Once valued at $47 billion as a private business, WeWork’s stock market valuation plummeted by nearly 98% over the past year. Reports suggest WeWork is contemplating a bankruptcy filing in New Jersey, as reported by the Wall Street Journal and corroborated by Reuters, citing an informed source.
In response to these reports, a WeWork spokesperson refrained from making any specific comments and stated, “We do not comment on speculation.”
WeWork’s shares
After this news emerged, WeWork’s shares experienced a more than 40% drop in after-hours trading in New York on Tuesday. The New York-based firm has faced substantial challenges since its failed attempt to launch its shares on the stock market in 2019 due to concerns regarding its debts, losses, and management issues.
A week before confirming the halt of its share sale, founder Adam Neumann stepped down as chief executive, citing that scrutiny of his leadership had significantly disrupted the company.
The pandemic also severely affected WeWork, as social distancing guidelines led people to work from home. WeWork eventually entered the New York Stock Exchange in 2021 with a notably reduced valuation.
The Japanese conglomerate SoftBank has invested tens of billions of dollars into WeWork as the company continued to incur losses. In August, WeWork expressed “substantial doubt” about its capability to sustain operations, citing challenges such as weakened demand and a challenging operational environment.
The company also witnessed the departure of several top executives in the current year, including chief executive and chairman Sandeep Mathrani. As of the end of June, WeWork operated in 777 locations across 39 countries.