UNEXPECTEDLY: WeWork, once valued at $47 billion, files for bankruptcy.
Office-sharing company WeWork filed for Chapter 11 bankruptcy protection in New Jersey federal court Monday, saying that it had entered into agreements with the vast majority of its secured note holders and that it intended to trim “non-operational” leases.
The bankruptcy filing is limited to WeWork’s locations in the U.S. and Canada, the company said in a press release. The company reported liabilities ranging from $10 billion to $50 billion, according to a bankruptcy filing.
“I am deeply grateful for the support of our financial stakeholders as we work together to strengthen our capital structure and expedite this process through the Restructuring Support Agreement,” WeWork CEO David Tolley said in a press release. “We remain committed to investing in our products, services, and world-class team of employees to support our community.
WeWork has suffered one of the most spectacular corporate collapses in recent U.S. history over the past few years. Valued in 2019 at $47 billion in a round led by Masayoshi Son’s SoftBank, the company tried and failed to go public five years ago.
The pandemic caused further pain as many companies abruptly ended their leases, and the economic slump that followed led even more clients to close their doors.
It’s quite a contrast to WeWork’s absolutely bonkers early days: ‘This Is Not the Way Everybody Behaves.’ How Adam Neumann’s Over-the-Top Style Built WeWork.
For Mr. Neumann and the investors, the premise has always been that the market would look at We as more than real estate. The high valuation—twice that of United Airlines Holdings Inc. —has enabled the company to continue to raise money to fund new desks and offices and keep growing, even as losses persisted.
He has created a distinct culture in his mold. T-shirts and signs sport slogans such as “hustle harder” and “Thank God it’s Monday.” Employees are often big company boosters, creating a work-hard, play-hard office, with a millennial hipster vibe.
Alcohol has been a big part of the culture, particularly in We’s first half-decade. Mr. Neumann has told people he likes how it brings people together, and tequila, his favorite, flows freely. Executive retreats sport numerous cases of Don Julio 1942, with a retail price of more than $110 a bottle, and pours sometimes start in the morning.
A few weeks after Mr. Neumann fired 7% of the staff in 2016, he somberly addressed the issue at an evening all-hands meeting at headquarters, telling attendees the move was tough but necessary to cut costs, and the company would be better because of it.
Then employees carrying trays of plastic shot glasses filled with tequila came into the room, followed by toasts and drinks.
Soon after, Darryl McDaniels of hip-hop group Run-DMC entered the room, embraced Mr. Neumann and played a set for the staff. Workers danced to the 1980s hit “It’s Tricky” as the tequila trays made more rounds; some others, still focused on the firings, say they were stunned and confused.
In 2019, Neumann reportedly received $1.7 billion to leave WeWork.