WeWork files for bankruptcy
WeWork files for bankruptcy
In the documents submitted to the court in New Jersey, the American company stated that it is seeking permission to cancel leases in specific locations. The bankruptcy has no effect on WeWork Israel, which is owned by the Ampa Group.
The office-sharing company WeWork has officially filed for bankruptcy. This is a significant fall for the company founded by Adam Neumann which received billions of dollars of investment from the Japanese giant Softbank.
The Associated Press reported that in the documents submitted to the New Jersey court, the company did not provide too many details about the planned reorganization procedure, but stated that it is seeking permission to cancel leases in specific locations defined as inapplicable. According to the company, they have reached an agreement with most creditors to convert existing loans and bonds worth $3 billion into shares in the company after the process is completed. CEO David Tolley said he estimates the process will take less than seven months.
It should be noted that WeWork Israel is a privately held Israeli company owned by the Ampa Group and therefore is not legally or financially affected by the situation of the American company.
Trading in the parent company's stock was suspended yesterday (Monday) due to the assessment that it will file for protection from creditors (Chapter 11). The move was done after the company was valued at $47 billion at its peak. The decline began in 2019 when the company planned to make an initial public offering (IPO), but the plan was eventually shelved after potential investors raised doubts about its financing and business plan. The failed IPO attempt also ended with the ousting of Neumann. The offering was completed in 2021 following a merger with the SPAC BOWX. However, the company had difficulty dealing with the expensive leases it signed before the outbreak of Covid-19, which resulted in a drop in occupancy rates and the shift to remote work during the pandemic.
In August, WeWork issued a going concern statement and announced: "There is significant doubt about its ability to continue operating." This is due to the losses and capital needs. The company published a plan to improve its financial situation but emphasized that the degree of success in implementing the plan in the next 12 months will determine its ability to avoid bankruptcy.
According to the documents filed, the company has over 700 properties worldwide with an area of more than 3.7 million square meters for rent. Almost half of the properties are in the U.S. and Canada.
The WeWork Israel Team sent out the following message: “WeWork Israel is a private Israeli company fully owned by the Ampa Group, one of the largest real estate and business corporations in Israel.
“WeWork Israel is not a part of this strategic reorganization process and there will be no impact on our members, vendors, employees, and real estate partners. Our operations remain unchanged and we will continue to provide the services and grow our presence in Israel.”
