Who is the CEO of WeWork? Company once valued at $47B files for bankruptcy amid empty offices
NEW YORK CITY, NEW YORK: WeWork, the beleaguered co-working startup headed by David Tolley, has filed for bankruptcy in the United States after years of struggling to find its footing.
The company, which rents out co-working spaces to freelancers, start-ups, and established companies, filed for Chapter 11 bankruptcy protection in New Jersey on Monday, November 6, as part of a "comprehensive reorganization" of its operations.
In the filing, the company, once valued at $47bn on the private market, reported liabilities ranging from $10-$50billion.
“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.
In a press release, CEO Tolley also stated “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.”
“We remain committed to investing in our products, services, and world-class team of employees to support our community,” he continued.
The bankruptcy announcement came after WeWork suffered a 98 per cent decline in its share price this year, which left it with a market value of less than $50 million
What led to WeWork’s bankruptcy?
The New York-based company, which was founded in 2010, first ran into issues when it sought to go public in 2019. In that year, the firm published its full financials, revealing a massive $900 million loss in just six months, according to Daily Mail.
However, the Initial public offering (IPO) failed after investors raised worries over the company's business model and governance under founder and former CEO Adam Neumann.
This resulted in a stunning collapse for the company, with its valuation falling to less than $10 billion. The collapse also affected Neumann, who was fired amid claims of a toxic environment at WeWork.
After merging with a special purpose acquisition company, the business finally went public in October 2021, but the turmoil persisted and it ultimately lost 98 per cent of its worth.
The Covid-19 epidemic caused even more damage to the corporation, as office space became less valuable due to remote work and early lease terminations.
WeWork has still not reported a profit since restrictions were eased. On August 8, the firm reported to authorities that it has had significant member turnover rates and that the macroeconomic environment has further reduced demand for its shared office spaces.
According to the company's website, WeWork has 512,000 members in its workplaces in 33 countries, and there are presently 32 co-working spaces in the US.
But office vacancies in the United States have exceeded 20 percent early this year, according to real estate services company JLL.
Researchers from Columbia University also discovered a 45 per cent decline in office prices in 2020, with no indication of a rebound in the near future.
What did Adam Neumann say about WeWork’s bankruptcy?
Neumann, who built WeWork into a feted start-up, told CNBC that he was disappointed by the filing.
“It has been challenging for me to watch from the sidelines since 2019 as WeWork has failed to take advantage of a product that is more relevant today than ever before,” the former CEO said.
“I believe that, with the right strategy and team, a reorganization will enable WeWork to emerge successfully,” he continued.
Neumann stepped down as CEO in September 2019 after critics noticed questionable self-dealings in the company’s IPO filing, like selling the trademark to the word “We” for $6 million in stock.
Since his departure, Neumann embarked on another real-estate tech venture, called Flow, which raised $350M from the Silicon Valley venture capital firm Andreessen Horowitz last year.