WeWork, a flexible workspace provider that plans to file bankruptcy as soon as next week. This is a dramatic turn of events for a company once valued at $47 Billion.
The Wall Street Journal broke the story first, and shares of the company dropped 39 percent to $1.40 at the end of New York’s late trading. The shares have dropped 96 percent this year.
WeWork, a New York-based company, is considering filing for Chapter 11 in New Jersey.
Yesterday, the company with a large debt decided to stop paying interest on $6.4 million.
WeWork’s spokesman, who declined comment on the report of bankruptcy, stated: “We believe that our productive and ongoing discussions with key financial stakeholders will allow us to address the capital structure and position our company for long-term growth.
This agreement gives us time to have positive discussions as we engage them in our ongoing strategic efforts for enhancing our capital structure. This agreement is not related to our daily operations.”
Investors’ skepticism about its business model, which involves taking long-term leasing and renting them out for a short time period and its large losses has led to the company being in turmoil.
WeWork was founded by Adam Neumann in New York in 2010. It initially catered to small business owners, freelancers and start-ups. However, it quickly expanded to larger clients.
The company was once the most celebrated start-up in the world, valued at $47 billion. WeWork is worth about $120 million and went public in 2021.
WeWork has been trying to renegotiate nearly all of its leases after raising concerns about its ability stay in business. The company that provides shared office spaces said its lease obligations were “too large” and “out-of-step” with current market conditions.
WeWork expressed “substantial doubts” in August about its ability continue to operate, as many top executives, such as Sandeep Mathrani the chief executive, have left this year.