WeWork is set to exit bankruptcy in the next few weeks after its restructuring plan was confirmed by the United States Bankruptcy Court.
WeWork will exit Chapter 11 bankruptcy in mid-June. Image : Shutterstock – Credit: YuniqueB
The flexible office giant said the reorganisation was the “final step in the company’s operational and financial restructuring” and would allow it to re-emerge with less debt and a more streamline, sustainable portfolio.
The rescue deal sees property tech firm Yardi become majority (60%) shareholder via a £268m investment.
A separate group of hedge funds has agreed to provide £90m for a stake of around 20% in the company, while creditors such as SoftBank, the firm’s biggest backer, will hold the remaining 20% of the new WeWork.
The company expects to emerge from Chapter 11 bankruptcy in mid-June following the completion of routine administrative matters and will see it “eliminate all of its $4bn (£3.19bn) of outstanding, prepetition debt obligations”.
Founder Adam Neumann last week dropped his attempt to buy back the troubled co-working office provider, also hitting out at the chosen bankruptcy rescue plan as “unlikely to succeed”.
The new WeWork will operate as a private company owned by its prepetition secured lenders, and the firm hopes the new beginning will “end the substantial operating losses that characterised the company’s years of hypergrowth and subsequent contraction”.
Approving the plan, judge John Sherwood said the restructuring would position the firm to be “a viable, successful company”.
David Tolley, chief executive officer, said: “In one of the largest and most complex restructurings, we have achieved extraordinary outcomes.
“Over the last year, we have also seen strong demand across the WeWork system and increased our member net promoter scores. Each of these achievements represents an exceptional testament to our people, our brand and our industry-leading service offerings.”
WeWork entered the restructuring process nine months ago amid heavy speculation about its future in a bid to tackle its high-cost, legacy lease portfolio and large corporate debt.
Since then, it has renegotiated hundreds of office leases worldwide and further exited a number of locations.
WeWork has said it plans to operate 337 shared office spaces globally after the bankruptcy, about half the number of June 2023.
