WeWork plans to file for bankruptcy next week.
The Wall Street Journal reported Tuesday that the flexible workspace company will likely file for Chapter 11 bankruptcy in the US.
Following the reports, shares of WeWork fell by more than 30% during after-hours trading.
WeWork, a company that sublets office space on a monthly basis after leasing it for ten years from an office provider, has seen its value plummet by nearly 98pc in the last year, as more people work from home.
WeWork, a once-popular Silicon Valley company valued at $47bn ($38.7bn) warned that the company faces bankruptcy in August unless it “improves liquidity and profitability within the next year”.
This year, the shared office provider restructured their debt and began renegotiating most of their leases to drastically reduce costs. They warned that they would close “unfit and low-performing” locations.
WeWork, however, has entered into a seven-day agreement forbearance with its lenders, after defaulting on interest payment in October.
David Tolley, the interim chief executive who took over the role of permanent leader last month has been given the task to turn around the business.
Mr Tolley attributed the company’s problems to the excess of office space that was available after the pandemic.
He said: “Excessive supply in commercial real-estate, increased competition in flexible spaces and macroeconomic instability drove higher member turnover and softer demands than we expected, resulting in slight declines in memberships.”
WeWork, co-founded in 2010 by Adam Neumann, grew rapidly in an age of low interest rates.
Softbank’s start-up was forced to withdraw from the New Stock Exchange after investors raised concerns about the company’s losses, corporate governance, and sustainability.
After intense pressure from board members and investors, Mr Neumann resigned as CEO shortly after the cancellation of the initial public offering.
WeWork’s public debut came two years later, in a deal that valued the company at about $8bn. This was a little over a fifth of its peak value.
WeWork has declined to comment.