WeWork will focus “on business continuity and delivering best-in-class services to its members, as global operations are expected to continue as usual,” it said.
The decision reflects years of staggering financial losses and WeWork’s drawn-out struggles to fill office spaces, which were worsened by the coronavirus pandemic.
WeWork warned that it was at risk of bankruptcy in August after recording a net loss of $700 million in the first six months of the year and $10.7 billion in net losses in the previous three years. Weeks later, David Tolley, its interim chief executive, said WeWork would renegotiate “nearly all” of its leases to cut costs.
Last week, credit ratings agencies S&P Global Ratings and Fitch downgraded WeWork’s ratings after the company failed to meet interest payments that were due in early October. Fitch said WeWork has projected growth and cost reductions that would lead to break-even results in 2021 and 2022, but that WeWork’s performance had been “consistently worse than projections.”
WeWork is “still burning cash,” despite recent cost-saving moves through “reduced head count and lease terminations,” Fitch said.
“I think we could pick that as one of the last dominoes to fall,” Garrett Pendergraft, a professor at Pepperdine University who teaches business ethics, said of the missed interest payment.
“It’s always easy, in retrospect, to point out the signs that [the bankruptcy] was going to happen,” Pendergraft said. “But the signs were there.”
John Bringardner, the head of Debtwire, which provides data on fixed income markets, said he expected WeWork’s bankruptcy filing to be “an orderly affair.”
“The company and its advisors have been orchestrating the process for months,” he wrote in a note last week released to reporters before the bankruptcy announcement.
What is “clear is that WeWork will emerge from its restructuring with a far smaller footprint,” Bringardner wrote.
Kelly Kasulis Cho and Bryan Pietsch contributed to this report.