Unicorn WeWork files for bankruptcy next week

WeWork plans to file for bankruptcy as early as next week, Reuters reported. The company is struggling with massive debt and ongoing losses.

WeWork shares fell 32% in premarket trading after the Wall Street Journal reported the news. WeWork shares have fallen about 96% this year.

Backed by SoftBank, WeWork is a co-working startup that was valued at $47 billion in 2019. A darling of venture capitalists, their performance has not met expectations.

WeWork has struggled since its failed initial public offering (IPO) in 2019, due to investor skepticism about the shared office model and concerns about the startup’s large losses.

That same year, company co-founder Adam Neumann was also fired following scandals over his management style.

WeWork plans to file for bankruptcy as early as next week (Photo: Forbes).

WeWork’s troubles did not ease in the years that followed. The company eventually went public at a much lower valuation. Despite SoftBank’s billion-dollar bailout, WeWork continued to lose money.

As of the end of June, the company had $2.9 billion in long-term debt and more than $13 billion in rent payments. According to Reuters , rising interest costs are hurting the commercial real estate sector.

In August, WeWork raised doubts about its ability to continue operating as a series of senior executives left the company. CEO Sandeep Mathrani also resigned this year.

WeWork previously said it had signed an agreement with creditors to suspend payments on some of its debt as the grace period nears its end.

A bankruptcy filing by WeWork would send shockwaves through the market, as the company was valued at $47 billion in 2019, and would be a historic failure for SoftBank, the Japanese conglomerate that has poured billions of dollars into WeWork.

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