WeWork cleared to exit bankruptcy, shedding co-founder Neumann’s legacy

Washington – WeWork has won bankruptcy court approval to shed billions in debt, drop unprofitable leases from its office workspace portfolio and leave behind

the legacy of co-founder Adam Neumann.

US bankruptcy judge John Sherwood on May 30 said he would approve the co-working company’s restructuring plan,

clearing WeWork’s path to exiting bankruptcy

under the ownership of its senior lenders.

“It’s been a little more than six months, but it’s felt like a lifetime,” company attorney Steven Serajeddini said, referring to tough negotiations and various disputes WeWork had navigated since it filed for bankruptcy in 2023.

In the coming days, the company plans to execute all the financial contracts needed to fund the reorganisation, attorney Ciara Foster told Judge Sherwood.

The move marks WeWork’s final break with Mr Neumann, who unsuccessfully made a last-minute bid to restructure the company under an alternate plan that was rejected by the company’s current managers and lenders.

Epic fall

The company struggled to bounce back from its epic fall nearly five years ago after a botched initial public offering (IPO). Under Mr Neumann, WeWork was the fastest-growing co-working company in the world. The former chief executive led the firm on an aggressive growth trajectory, taking on scores of long-term leases with landlords, fixing up office spaces, then renting it out to workers or companies on a shorter-term basis.

By 2019, WeWork was the largest private-sector tenant in both London and New York, among two of the largest office markets in the world. It was also gearing up for one of the decade’s most anticipated IPO. Yet the company was burning through cash, with an unclear path to profitability.

Mr Neumann’s bet proved ultimately disastrous for WeWork as investors and board members grew concerned about the company’s corporate governance and aggressive growth strategies. Shortly after, the firm said it would delay its IPO and Mr Neumann left the company.

New valuation

WeWork has said its restructuring will cut its future rent obligations in half, or about US$12 billion (S$16.2 billion) overall.

The restructured company would be worth between US$665 million and US$865 million when it leaves Chapter 11, the company said in court papers. This is a fraction of the firm’s peak valuation of US$47 billion.

WeWork’s secured creditors are taking substantial haircuts in the restructuring and are anticipated to get between three cents and five cents on the dollar depending on the debt they own, according to a court filing.

Unsecured creditors are expected to get back just one cent on the dollar, but would have wiped out completely in a liquidation. BLOOMBERG