Established in 2010… The company’s value was once estimated at $47 billion.
After COVID-19, the spread of telecommuting has led to business difficulties.
WeWork, an office sharing company that was experiencing serious financial difficulties, filed for bankruptcy protection in a U.S. court on the 6th (local time), U.S. business media CNBC reported.
According to reports, WeWork filed for Chapter 11 bankruptcy protection in New Jersey federal court on this day.
WeWork made profits by long-term leasing the entire or partial floor of a commercial building and then splitting it up and re-leasing it on a monthly basis. By introducing the concept of a shared office, the concept of the traditional office type was broken.
Founded in 2010, the company received an investment of $16.9 billion (about 22 trillion won) from Softbank Chairman Son Jeong-hee in 2016.
WeWork’s corporate value was estimated at $47 billion in 2019. However, as telecommuting spread due to the COVID-19 pandemic, many companies ended their lease contracts and faced financial difficulties. In addition, the ensuing economic downturn led to the closure of many contract companies, aggravating WeWork’s management difficulties.
WeWork announced in a press release today that it would limit the area for bankruptcy filing to the United States and Canada. According to bankruptcy filing data, WeWork reported debt ranging from $10 to $50 billion.
As of June, WeWork operates 777 branches in 39 countries around the world. There are 229 operating in the United States alone. A lease contract worth about $10 billion was signed from the second half of this year to the end of 2027, and an additional $15 billion from 2028.
However, due to continued deficits, $530 million in cash was used up in the first half of this year alone, and as of June, cash remaining was only about $250 million.
As rumors of bankruptcy arose, WeWork’s stock price fell more than 90% this year. WeWork’s stock price fell to 10 cents per share, and trading on the New York Stock Exchange was temporarily halted on the 6th.
WeWork co-founder Adam Newman told CNBC, “The filing for bankruptcy protection is disappointing, but I believe that with the right strategy, team, and reorganization, WeWork can take a successful leap forward again.”
Source: Donga
Mark Jones is a world traveler and journalist for News Rebeat. With a curious mind and a love of adventure, Mark brings a unique perspective to the latest global events and provides in-depth and thought-provoking coverage of the world at large.