WeWork cleared to exit bankruptcy and slash $4 billion in debt - Hindustan Times
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WeWork cleared to exit bankruptcy and slash $4 billion in debt

Reuters |
May 30, 2024 09:54 PM IST

WeWork expanded at breakneck speed but racked up steep losses on its over-extended real estate portfolio before filing for bankruptcy protection

By Dietrich Knauth

A U.S. bankruptcy judge on May 30 approved WeWork's Chapter 11 bankruptcy plan, allowing the shared office space provider to eliminate $4 billion in debt(Bloomberg)
A U.S. bankruptcy judge on May 30 approved WeWork's Chapter 11 bankruptcy plan, allowing the shared office space provider to eliminate $4 billion in debt(Bloomberg)

NEW YORK, May 30 (Reuters) - A U.S. bankruptcy judge on Thursday approved WeWork's Chapter 11 bankruptcy plan, allowing the shared office space provider to eliminate $4 billion in debt and hand the company's equity over to a group of lenders and real estate technology company Yardi Systems.

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Flexible workspace provider WeWork expanded at breakneck speed but racked up steep losses on its over-extended real estate portfolio before filing for bankruptcy protection in November 2023.

Also Read: How WeWork, once valued at $47 billion, ended up filing for bankruptcy?

U.S. Bankruptcy Judge John Sherwood approved WeWork's restructuring at a court hearing in Newark, New Jersey. With that approval secured, WeWork will be ready to exit from bankruptcy with no debt "in a matter of days," WeWork attorney Steven Serajeddini said at the hearing.

WeWork used its bankruptcy to negotiate a significant reduction in future rent costs from its landlords and cancel leases at about one-third of its locations, ultimately reducing its future rent costs by more than $12 billion. WeWork expects to operate 337 shared office spaces after its bankruptcy, with more than 170 locations in the U.S. and Canada.

Also Read: Ousted co-founder Adam Neumann offers to buy back WeWork out of bankruptcy for over $500 million: Who is he?

"Due to the tireless efforts of our team, and the unwavering loyalty of so many of our members, we have completed our Chapter 11 proceedings with success well beyond our initial expectations," WeWork CEO David Tolley said Thursday.

WeWork rejected an alternate buyout proposal offered by its co-founder and ex-CEO Adam Neumann. The company said Neumann did not offer a high enough price to win over WeWork's lenders, who preferred to take an equity stake as part of the bankruptcy deal.

WeWork's restructuring will cancel existing equity shares, but top shareholder SoftBank will retain a minority equity stake on account of loans it provided to WeWork. The company, once valued at $47 billion, estimates that its post-bankruptcy equity is worth about $750 million.

Also Read: WeWork creditors demand company negotiate with potential buyers

 (Reporting by Dietrich Knauth, Editing by Alexia Garamfalvi and Josie Kao)

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