WeWork, the struggling office-sharing company, has initiated the closure of several of its global properties, as reported by the BBC.
With a previous valuation of $47 billion (£38.6 billion), the company’s shares have plummeted amidst speculations that it could file for bankruptcy as early as the following week.
While the precise number of UK locations to be closed remains undisclosed, WeWork has confirmed the shutdown of one of its central London buildings near Blackfriars station. This step aligns with the company’s stated initiative to enhance liquidity and fortify its balance sheet.
According to the BBC, WeWork members at the Southbank building in London revealed that they had received emails from the company, notifying them of the closure of “unprofitable” sites. They have been instructed to vacate the premises by the end of November, with WeWork promising to arrange alternative workplace solutions for them.
In the face of financial challenges, WeWork disclosed to the US financial regulator its agreement with creditors to temporarily postpone some of its debt payments.
The company is now expected to initiate renegotiations for many of its leases, not just in the UK but globally, in a bid to address the repercussions stemming from rapid expansion, escalating interest rates, a failed attempt to go public, and the departure of its co-founder.
WeWork emphasized its continued commitment to the UK and Ireland in a statement to the BBC, yet declined to comment on speculations regarding its potential entry into Chapter 11 bankruptcy proceedings in the United States.
What led to WeWork’s downfall? By the end of June, the firm had established over 700 locations in 39 countries worldwide.
Since its initial unsuccessful attempt to issue shares on the stock market in 2019, the New York-based company has encountered difficulties linked to its debts, losses, and management concerns.
A week prior to confirming the cancellation of its share sale, the company’s founder, Adam Neumann, resigned as CEO, citing that the scrutiny of his leadership had become a significant distraction.
The outbreak of the pandemic a few months after the failed share listing triggered a surge in remote work and exposed WeWork to public criticism from tenants seeking to terminate their leases.
However, the company continued its operations by divesting certain businesses, downsizing its workforce, and terminating or modifying numerous leases in an effort to stem its financial losses before running out of funds.
WeWork eventually made its debut on the New York Stock Exchange in 2021, albeit at a considerably lower valuation than initially projected.
SoftBank, the Japanese conglomerate, injected billions of dollars into WeWork as it continued to face financial losses.
Over the past year, the company has witnessed a staggering decline of nearly 99% in its share price.
In August, WeWork expressed “significant doubt” regarding its ability to sustain operations, citing challenges such as weakened demand and a challenging operating environment in a statement.