WeWork Files for Bankruptcy, Citing Unsustainable Leases and Commercial Real Estate Market Shifts

SoftBank’s Vision Fund faces significant losses as coworking giant, once valued at $47 billion, faces debt restructuring and termination of unprofitable leases in bankruptcy proceedings.

• WeWork filed for Chapter 11 bankruptcy protection citing unsustainable long-term leases and a slow return to the office due to the ongoing effects of the pandemic which has severely affected the commercial real estate market.
• The bankruptcy follows a failed IPO attempt in 2019, financial losses, and the resignation of founder and CEO Adam Neumann. Trading in WeWork shares was halted at 84 cents, giving the firm a market value of $43 million, a significant drop from its January 2019 peak of $47 billion.
• During the bankruptcy, WeWork will renegotiate many of its leases and plans to reject some 'largely non-operational' ones. The company currently leases millions of square feet of office space in 777 worldwide locations but the bankruptcy filing only affects locations in the U.S. and Canada.
• The bankruptcy is a big blow for SoftBank’s Vision Fund which faces significant losses. WeWork's bankruptcy is also said to have damaged the professional reputation of SoftBank’s billionaire boss Masayoshi Son, due to overriding moments of caution and investing heavily in WeWork.
• While the bankruptcy filing presents challenges, it is seen as an opportunity for WeWork to restructure. Chapter 11 proceedings allow for such restructuring and are different from Chapter 7 proceedings, which involve liquidation. This means that WeWork is likely to continue operating in some capacity after the proceedings.

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