WeWork is set to emerge from bankruptcy, hoping that less debt and fewer offices will give it a new lease of life. The company which rents out shared office workspaces, founded in 2010 and once hailed as the future of the office, racked up losses during an aggressive global expansion.
It filed for bankruptcy last year, reeling from the sharp drop in demand for office space sparked by the pandemic. The company has since used court protection to renegotiate the terms of its rental leases and work with its lenders.
WeWork has said it plans to operate 337 shared office spaces globally after the bankruptcy, about half the number of June 2023. The US and Canada will remain its biggest market, with more than 170 locations.
The plan approved in a New Jersey bankruptcy court on Thursday also eliminates $4bn (£3.1bn) worth of the firm's debt, and reduces WeWork's future rent obligations by $12bn (£9.4bn), or more than half, according to the company.
The changes also include a new owner, Yardi Systems, which supplies software to office and residential landlords. The firm is taking a majority stake in the company, in exchange for providing $450m (£353m) in financing along with other investors.
Japan's SoftBank Group also remains a backer. In approving the plan, Judge John Sherwood said the restructuring would position the firm to be “a viable, successful company”.
WeWork said it expected the restructuring to be completed by mid-June. The approval of the deal comes days after former WeWork boss Adam Neumann conceded that his effort to buy the company would not move forward.
At the time, he said he did not think WeWork's plan would put it on a viable path. He had reportedly offered $500m for the company, which valued at nearly $50bn in a private investment round in 2019.
Mr Neumann left the company after a failed effort to raise more money by listing shares on the stock market revealed the scale of its financial losses and raised questions about his leadership.
The debacle inspired the Apple TV series WeCrashed, starring Jared Leto and Anne Hathaway.
— CutC by bbc.com
