The collapse of a large organization is never a pretty sight and the WeWork bankruptcy news that has hit the stands is no different. TheWeWork bankruptcy filing announced on Monday stated that the office-sharing company has filed for Chapter 11 bankruptcy protection with the New Jersey Federal Court. According to the latest updates on WeWork Inc., only WeWork’s U.S. and Canada offices will be affected but the news had employees worried across borders.
The WeWork bankruptcy filing mentioned a $19 billion debt number, with assets listed at $15 billion. The startup had been well on its way to initiating an IPO back in 2019 but the pandemic drove the idea completely out of the works. The company had at one time held a $47 billion valuation by SoftBank Group but could not kickstart its public presence. Two years later WeWork went public via a special purpose acquisition company but it was never able to make back the position it once held.
Image of WeWork’s 27 E 28th St New York Office Conference Room Space, available on the website.
Does the Wework Bankruptcy Come as a Surprise?
Earlier this year, in its August regulatory filings, the WeWork bankruptcy became a likely reality after the company expressed doubts about its financial sustainability. But this was not the first sign that the company was starting to succumb to its financial burdens. After its first failed IPO attempt, the company struggled to bring its valuation up at all. Eventually, with its $9 billion SPAC merger with BowX Acquisition in 2012, the company hoped to turn things around and while the WeWork shares did see an upward tick of 13 percent, the success was not long-lasting.
The company quickly saw 98 percent of its value spilling away, according to CNBC. Mid-August, the company offered a reverse stock split of 1-for-40 to try and bring the WeWork share values to move above $1 at the NYSE but the efforts remained unsuccessful. The WeWork share value fell to 83-84 cents and it remained there until trading officially closed this week.
The company has even shifted hands frequently to try and get a fresh set of eyes on the company’s future, but this hasn’t helped simplify matters either. After founder Adam Neumann stepped down from the CEO position in 2019, Artie Minson and Sebastian Gunningham temporarily took over as co-CEOs. In 2020, Sandeep Mathrani stepped up to try and slow down the company’s decline and many tough calls were made, from employee layoffs to lease changes and vacating of multiple locations. The company has spent the last few months planning on closures for some of its less successful locations, renegotiating leases where possible.
Just before the WeWork bankruptcy petition, David Tolley took over as CEO, but it is still being determined how much he can do to bring the company back to calm waters.
Will Employees Be Laid Off as a Result of the WeWork Bankruptcy?
After the company’s initial launch in 2010, WeWork has faced many uphill battles in its journey. 2019 and 2020 saw extensive layoffs as the company had to shut down its offices and sell off spaces that were no longer in use due to COVID-19. 2,400 employees, or 20 percent of the WeWork workforce were laid off.
Now with the latest reports on WeWork’s bankruptcy, it is uncertain how the company will regulate its workforce and ensure they are supported. As per the company website’s own report on the WeWork bankruptcy filing, the business should still proceed as usual for its existing vendors and members, with the hope of financial liquidity soon available to continue with their work.
The company hopes to be granted “First Day Motions” in order to pay for all existing and upcoming obligations such as “employee benefits and wages, vendors and suppliers of goods and services, and insurance and tax obligations.” With constant reports of layoffs across industries, it is likely a worrying time for employees trying to assess their position in all of this. The WeWork bankruptcy filing probably involves extreme uncertainty for everyone associated with the company.
Will the WeWork Bankruptcy Affect Its Global Holdings?
According to the latest news on WeWork, only the U.S. and Canada offices are set to face changes as a result of the bankruptcy filing. The company has subsidiaries and coworking office spaces available in 119 cities across the globe. Many of these locations operate independently and are likely to remain unaffected by the results of the WeWork bankruptcy filing.
With the Chapter 11 bankruptcy filing underway, there is hope that the company will be able to reorganize funds, get adjustments on leases, and make a comeback overall to regain its space once more. With such a significantly-sized business on the line, it is essential that the employees are not put at risk to accommodate the company’s financial failings.
