Office space-sharing giant WeWork filed for bankruptcy in the United States today. The company struggled to recover from the effects of Covid-19 on the economy and its failed initial public offering in 2019. The New York-based corporation filed a Chapter 11 filing in New Jersey, stating that its assets and liabilities were between $10 billion and $50 billion. Amid this, old remarks of WeWork CEO David Tolley stating that the company is “here to stay” have gone viral.
In September, the executive in a public letter emphasised that WeWork is not going anywhere and that it was immediately undergoing reworking its leases worldwide.”Today, we are kicking off a process of global engagement with our landlords to renegotiate nearly all our leases. As part of these negotiations, we expect to exit unfit and underperforming locations and to reinvest in our strongest assets as we continuously improve our product,” he wrote, as per CNBC.
“Despite the important actions we’ve taken over time to improve our company and real estate footprint, our current lease liabilities – which were over two-thirds of total operating expenses in the second quarter – still remain too high and are dramatically out of step with current market conditions,” Mr Tolley wrote.
He added, “We are taking immediate action to permanently fix our inflexible and high-cost lease portfolio to achieve the sustainable operating model that we need to serve our members for many years to come. Let me finish by making one thing clear: WeWork is here to stay”
These remarks came at a time when the company was struggling to stay solvent. WeWork’s operations have been declining since the company’s failure with its initial public offering in 2019. After investing billions of dollars to try to save the company, SoftBank, the company’s principal owner, eventually took it public through a special purpose acquisition company in 2021. The failed deal led to founder Adam Neumann’s resignation as chief executive officer and led to a dramatic slide in WeWork’s valuation, which once stood as high as $47 billion.
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