WeWork is set to emerge from bankruptcy next month after a New Jersey bankruptcy court approved the company’s financial restructuring plans.
The flexible workspace business filed for Chapter 11 bankruptcy protection in November last year and has since renegotiated hundreds of office leases to significantly reduce its overheads.
Through the approved plan, WeWork will: eliminate more than $4bn of prepetition debt, emerging debt-free; reduce total future rent expenses by approximately $12bn – more than 50%; secure $400m of new equity capital to support operating investments and future strategic growth; and it will operate as a private company, owned by its prepetition secured lenders.
In April, Yardi Systems agreed to provide WeWork with funding of $337m, with a further $112m coming from bondholders. Under the terms of the proposals, Yardi will acquire a 60% equity stake in WeWork, a group of lenders will get 20% and SoftBank will receive 20%.
The company said the restructuring plan would enable it to end “the substantial operating losses that characterised the company’s years of hypergrowth and subsequent contraction”.
David Tolley, chief executive officer of WeWork, said: “Due to the tireless efforts of our team, and the unwavering loyalty of so many of our members, we have completed our Chapter 11 proceedings with success well beyond our initial expectations. 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.”
Peter Greenspan, global head of real estate at WeWork, added: “We have worked closely with the largest landlords around the world and one thing is clear: they believe in the future of the flexible office and they believe in the future of WeWork. As global office demand continues to move toward flexible approaches, only WeWork has the technology, community and data to support landlords in creating truly outstanding offerings for modern organisations. We’re grateful to each and every landlord who came to the table to collaborate with us over the past nine months, and we look forward to building on our existing partnerships far into the future.”
Earlier this week, WeWork co-founder Adam Neumann confirmed he had shelved plans to buy back the business he was ousted from in 2019.
In a statement, Neumann told the New York Times: “For several months, we tried to work constructively with WeWork to create a strategy that would allow it to thrive. Instead, the company looks to be emerging from bankruptcy with a plan that appears unrealistic and unlikely to succeed.”
