NEW YORK (AP) — Trading in WeWork shares halted Monday amid rumors that the office-sharing company once valued at up to $47 billion will seek bankruptcy protection.
Last week, The Wall Street Journal and other media outlets reported, citing unnamed sources familiar with the matter, that WeWork planned to file for Chapter 11 bankruptcy protection as early as this week.
A WeWork spokesman said last week that the company did not comment on speculation and did not immediately return messages after trading in the company’s shares halted on Monday.
Shares of WeWork, which cost more than $400 two years ago, were available for less than $1 on Monday.
The specter of bankruptcy has been hovering over WeWork for some time. In August, the New York company sounded the alarm about its ability to stay in business. But cracks began to appear a few years ago.
WeWork is paying the price for aggressive expansion in its early years. The company went public in October 2021 after its first attempt failed spectacularly two years earlier. The debacle led to the downfall of founder and CEO Adam Neumann, whose erratic behavior and exorbitant spending spooked early investors.
Japan’s SoftBank stepped in to keep WeWork afloat and acquired majority control of the company.
Despite efforts to turn the company around since Neumann’s departure – including significant cuts in operating costs and rising revenue – WeWork has struggled in a commercial real estate market rocked by rising borrowing costs and a changing dynamic for millions of office workers now checking in remotely offices.
When WeWork announced plans to renegotiate almost all of its leases in September, CEO David Tolley noted that the company’s lease liabilities accounted for more than two-thirds of its operating costs in the second quarter of this year – still “too high” and “completely inconsistent with the current market conditions.”
Last month, WeWork waived high interest payments and introduced a 30-day grace period before defaulting. And last week, WeWork announced a forbearance agreement with bondholders that extended negotiations for a week before defaulting.