SoftBank's WeWork, once most valuable U.S. startup, succumbs to bankruptcy

investing.com:

(Reuters) — WeWork, the SoftBank (TYO:9984) Group-backed startup whose meteoric rise and fall reshaped the office sector globally, sought U.S. bankruptcy protection on Monday, after its bets on companies using more of its office-sharing space soured.

The move represents an admission by SoftBank, the Japanese technology group that owns about 60% of WeWork and has invested billions of dollars in its turnaround, that the company cannot survive unless it renegotiates its pricey leases in bankruptcy.

WeWork said it has entered into a restructuring agreement with key stakeholders to drastically reduce its existing funded debt, and also intended to file recognition proceedings in Canada.

The company's locations outside of the U.S. and Canada, as well as its franchisees around the word, are not affected by these proceedings, it added.

WeWork shares have fallen about 98.5% so far this year.

Profitability has remained elusive, as WeWork grapples with its expensive leases and corporate clients cancelling because some employees work from home. Paying for space consumed 74% of WeWork's revenue in the second quarter of 2023.

In a filing with the New Jersey bankruptcy court, WeWork listed estimated assets and liabilities in the range of $10 billon to $50 billion.

«WeWork could use provisions of the U.S. bankruptcy code to rid itself of onerous leases,» law firm Cadwalader, Wickersham & Taft LLP said in a note to landlords on its website in August. Some landlords are bracing for a significant impact.

«As part of today's filing, WeWork is requesting the ability to reject the leases of certain locations, which are largely nonoperational, and all affected members have received advanced notice,» the company said in a statement.

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