According to multiple media reports, WeWork (WE) is planning to file for bankruptcy within days as the company struggles under a massive debt load and escalating financial losses.
Shares of the workspace provider plunged 37% in extended trading after The Wall Street Journal newspaper first reported that WeWork is preparing a Chapter 11 bankruptcy filing in the State of New Jersey.
On Oct. 31, WeWork said that it had entered into an agreement with its creditors for a temporary postponement of payments for some of its debt.
The company had long-term debt of nearly $3 billion U.S. at the end of June and more than $13 billion U.S. in long-term leases.
WeWork's bankruptcy filing represents a stunning fall from grace for the company that was valued at $47 billion U.S. in 2019 and counts Japanese investment firm SoftBank as a major stockholder.
WeWork has steadily lost money since the Covid-19 pandemic threw into chaos its business model of taking long-term leases and renting them over short-term periods.
WeWork first raised “substantial doubt” about its ability to continue operations in August of this year. In the last two months, numerous executives have left the company, including chief executive officer (CEO) Sandeep Mathrani.
Prior to today (Nov. 1), the stock of WeWork had declined 99% since the company’s 2021 initial public offering (IPO). The shares currently trade at $2.28 U.S. each.
