{"id":2092645,"date":"2023-11-07T10:18:02","date_gmt":"2023-11-07T15:18:02","guid":{"rendered":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/softbanks-wework-once-most-valuable-us-startup-succumbs-to-bankruptcy\/"},"modified":"2023-11-07T10:23:54","modified_gmt":"2023-11-07T15:23:54","slug":"softbanks-wework-once-most-valuable-us-startup-succumbs-to-bankruptcy","status":"publish","type":"post","link":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/softbanks-wework-once-most-valuable-us-startup-succumbs-to-bankruptcy\/","title":{"rendered":"WeWork, once the US&#8217; most valuable startup, falls into bankruptcy under SoftBank."},"content":{"rendered":"<aside class=\"mashsb-container mashsb-main mashsb-stretched\"><div class=\"mashsb-box\"><div class=\"mashsb-count mash-medium\" style=\"&quot;\"><div class=\"counts mashsbcount\">24<\/div><span class=\"mashsb-sharetext\">SHARES<\/span><\/div><div class=\"mashsb-buttons\"><a class=\"mashicon-facebook mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/www.facebook.com\/sharer.php?u=https%3A%2F%2Fwww.conservativenewsdaily.net%2Fbreaking-news%2Fsoftbanks-wework-once-most-valuable-us-startup-succumbs-to-bankruptcy%2F\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Facebook<\/span><\/a><a class=\"mashicon-twitter mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/twitter.com\/intent\/tweet?text=&amp;url=https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=2092645&amp;via=ConservNewsDly\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Twitter<\/span><\/a><a class=\"mashicon-subscribe mash-medium mash-nomargin mashsb-noshadow\" href=\"#\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Subscribe<\/span><\/a><div class=\"onoffswitch2 mash-medium mashsb-noshadow\" style=\"display:none\"><\/div><\/div>\n            <\/div>\n                <div style=\"clear:both\"><\/div><\/aside>\n            <!-- Share buttons by mashshare.net - Version: 4.0.47--><h2>WeWork Files for Bankruptcy Protection<\/h2>\n<p>12:07 PM UTC \u2013 November 7, 2023<\/p>\n<p>(Reuters) \u2013 WeWork, the SoftBank Group-backed startup whose meteoric rise and fall reshaped the office sector globally, sought U.S. bankruptcy protection on Monday after its bets on companies using more of its office-sharing space soured.<\/p>\n<blockquote>\n<p>The move represents \u2062an admission by SoftBank (9984.T), the Japanese\u2063 technology group that\u200b owns \u2064about 60% of WeWork (WE.N) and has invested billions of\u2064 dollars in its turnaround,\u200d that the company cannot \u2064survive unless it renegotiates its\u200d pricey leases in bankruptcy.<\/p>\n<\/blockquote>\n<p>A WeWork spokesperson said about 92% of\u2062 the company\u2019s lenders had agreed to convert their secured debt into \u2063equity under a restructuring support agreement, wiping out\u2062 about $3 billion of\u2063 debt.<\/p>\n<p>The company, which also intends to file recognition proceedings in Canada, said it expected to \u2063have the financial liquidity to continue business\u200b normally \u200cand that its \u200dlocations outside of the U.S. and \u2062Canada, as well as\u200d its franchisees around the world, were not affected by these proceedings.<\/p>\n<p>WeWork had office space available at 777 locations worldwide as of\u2063 the end of June.<\/p>\n<p>SoftBank said it\u2064 believed \u200cWeWork\u2019s restructuring support agreement was the appropriate action for the company to reorganize its business and emerge from Chapter 11\u2063 proceedings.<\/p>\n<p>\u201cSoftBank will continue to act in the\u2062 best <a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/dems-critics-worried-biden-wont-release-trump-tax-returns\/\" title=\"Dems, Critics Worried Biden Won't Release Trump Tax Returns\">long-term interests<\/a> of our \u2062investors,\u201d\u200d the Japanese company said in a statement<\/p>\n<p>WeWork shares have fallen about 98.5% so far this year.<\/p>\n<p>Profitability has remained elusive,\u200c as WeWork grapples with expensive leases and corporate clients cancelling because of a trend toward employees working from home. Paying for space consumed 74% of WeWork\u2019s revenue in the second \u2064quarter of 2023, the\u2063 last\u200d time it \u2062reported financial results.<\/p>\n<p>In a filing with the New Jersey \u2062bankruptcy court, WeWork listed assets of $15.06 billion and liabilities of $18.66 billion as of June 30.<\/p>\n<p>\u201cWeWork could use provisions \u200bof the U.S. bankruptcy code to rid itself\u2062 of onerous leases,\u201d law firm Cadwalader, Wickersham &#038; Taft LLP said in\u2062 a note to landlords on \u2064its website in August. Some landlords are bracing for a significant\u2062 impact.<\/p>\n<p>\u201cAs part of today\u2019s filing, WeWork is requesting the ability to reject the\u200c leases of certain locations, which \u200care largely nonoperational, and all affected\u200d members have\u2064 received advanced\u2062 notice,\u201d the company said in a statement.<\/p>\n<p>Under its founder Adam Neumann, WeWork grew to be the most \u200dvaluable U.S. startup worth $47 billion. It attracted investments from blue-chip investors, including \u2064SoftBank and venture capital firm Benchmark, as well \u200cas the backing of major Wall Street Banks, including JPMorgan Chase (JPM.N).<\/p>\n<p>Neumann\u2019s pursuit of breakneck growth at the expense of profits, and revelations about his eccentric behavior, led to his ouster and the derailment of an <a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/breaking-exclusive-owners-of-solarwinds-have-links-to-obama-the-clintons-china-hong-kong-and-the-us-election-process\/\" title=\"BREAKING EXCLUSIVE: Owners of SolarWinds Have Links to Obama, the Clintons, China, Hong Kong and the US Election Process\">initial public offering<\/a> in 2019.<\/p>\n<p>SoftBank was forced to double down on its investment in WeWork, and tapped real estate\u2064 veteran \u200bSandeep Mathrani as its CEO. In 2021,\u2064 SoftBank cut\u2063 a deal to take WeWork public through a\u200b merger with a blank-check acquisition\u2063 company at\u200d an $8 billion valuation.<\/p>\n<p>WeWork managed to amend 590 leases, saving about $12.7\u200c billion in fixed lease payments. But this \u2062was not enough to compensate for the fallout from the COVID-19 pandemic, which kept office workers at home.<\/p>\n<p>Many of its landlords, who were also feeling the squeeze, had little incentive \u2062to give WeWork a break on the terms of\u200c their leases.<\/p>\n<p>While WeWork\u2063 had some success in signing up\u200d large conglomerates as clients,\u2062 many of its customers\u200d were startups and smaller businesses, which cut their spending as inflation soared and economic prospects soured.<\/p>\n<p>Adding to WeWork\u2019s woes was competition from its own\u200b landlords. Commercial property companies that traditionally only entered into <a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/softbanks-wework-once-most-valuable-us-startup-succumbs-to-bankruptcy\/\" title=\"WeWork, once the US' most valuable startup, falls into bankruptcy under SoftBank.\">long-term rent agreements started offering short<\/a>\u2063 and flexible \u2064leases to cope with \u200cthe \u200cdownturn in\u200c the office sector.<\/p>\n<p>Mathrani was succeeded as WeWork CEO this year by former investment banker and private equity executive \u2063David Tolley,\u200d who as chief executive of\u200d Intelsat helped the debt-stricken satellite communications provider emerge from bankruptcy in 2022.<\/p>\n<p>WeWork engaged in debt restructurings,\u2062 yet\u2064 this was not enough to stave off its bankruptcy. The company last week secured a seven-day extension from its creditors on an interest payment to win more time to negotiate with them.<\/p>\n<p>Shortly before \u2064WeWork filed\u2064 for bankruptcy, Neumann said in a statement, \u201cI believe that, with\u2064 the right strategy and team, a reorganization will enable WeWork to emerge successfully.\u201d<\/p>\n<p>Shares\u200c in SoftBank, which has largely written down its investment in WeWork over the years, closed up 0.3% on Tuesday in Tokyo, outperforming a 1.3% \u200dfall in the broader market (.N225).<\/p>\n<p>Reporting by Greg\u200b Roumeliotis\u200b in New York and Mrinmay Dey in Bengaluru; Editing \u2064by Arun Koyyur, Rashmi \u200dAich, Jamie Freed\u200d and Edmund Klamann<\/p>\n<h2>Other News:<\/h2>\n<ul>\n<li>An independent media group is suing the Federal government and NewsGuard, a private company that rates news sites on credibility and trust, accusing\u2064 them of violating the First Amendment.<\/li>\n<li>Florida Congressman Brian Mast says he is using his power \u200bto\u2062 raise new questions about the Biden Administration\u2019s handling of embattled special Iran envoy Robert Malley.<\/li>\n<li>Voters in Kentucky and Mississippi are preparing to head to the polls\u200c to decide their governors for the\u200b next four years.<\/li>\n<li>Ohioans will head to the polls Tuesday to determine the status of two \u200bhot\u200c button\u2063 social issues in the Buckeye State.<\/li>\n<li>EU introduces rules for Big Tech: clear labels\u200d for political ads,\u2063 funding,\u2063 election\u200d targets before key votes.<\/li>\n<li>Britain will make the makers of self-driving cars legally \u2064liable for any crashes under\u200d a framework for \u2062developing autonomous vehicles.<\/li>\n<li>Over <a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/7000-illegal-caravan-making-its-way-to-u-s\/\" title=\"Over 7,000 illegal caravan heading to U.S.\">100 social media studies<\/a> on X (formerly Twitter) disrupted by Elon \u200cMusk\u2019s platform access restrictions.<\/li>\n<li>NTT \u2062partners with\u2064 Toyota \u200bfor driverless tech tests and U.S. self-driving startup investment.<\/li>\n<\/ul>\n<p> <\/p>\n<h2> What are the key factors that led to\u2064 WeWork&#8217;s filing for bankruptcy\u2063 protection?<\/h2>\n<p><span>  Mpany emerge from bankruptcy protection. However,\u200d despite efforts to turn the company around, WeWork has now been forced to file for bankruptcy protection \u2063in the United States.<\/p>\n<p>WeWork, known for its shared office\u2063 space model, \u2062had experienced a rapid rise and fall in recent years.\u2062 With the backing of SoftBank\u2064 Group, the Japanese technology group that owns about \u206460% of WeWork, the\u200b startup was able to expand globally and attract\u2063 major investments. However, its business model faced\u200d significant challenges,\u200c especially \u2064during the COVID-19 \u2062pandemic.<\/p>\n<p>The pandemic \u200bshifted the dynamics of \u200coffice \u2064work, with \u2062more employees working remotely. This trend led \u200cto \u200dcorporate clients canceling their leases with \u2063WeWork, affecting\u200b the company&#8217;s revenue.\u2064 Additionally,\u2062 WeWork\u2063 struggled\u2063 with expensive leases that consumed \u2062a significant portion of its revenue, making\u200b profitability elusive.<\/p>\n<p>In\u200c an effort to reorganize and\u2064 emerge\u2064 from Chapter 11 proceedings, WeWork\u2063 sought U.S. bankruptcy\u200d protection.\u200c SoftBank, as\u2062 the\u2062 majority\u2063 shareholder, believed that \u200dthis was \u2064the\u200c appropriate step for the company to take. WeWork also aimed to file recognition proceedings\u200c in Canada and assured that\u200c its locations outside of the\u2064 U.S. and Canada, \u2062as well as its franchisees,\u200b would not be affected.<\/p>\n<p>As part of the bankruptcy filing, WeWork aimed to reject certain leases that were nonoperational. This\u200b move would allow \u2064the company \u2064to alleviate the burden of onerous leases. However, some landlords expressed concerns about the potential impact on their own businesses.<\/p>\n<p>The filing revealed that WeWork listed assets of $15.06 billion and liabilities of $18.66 billion as of June 30.\u200d This\u200b imbalance further \u200bhighlighted the financial challenges \u2064the company faced.<\/p>\n<p>WeWork had previously attempted\u2062 to save costs\u200d by amending leases, \u2062which resulted in \u200bsavings of $12.7\u2062 billion in fixed lease payments. However, the effects of\u2062 the pandemic proved too significant to overcome. Many of WeWork&#8217;s clients, including startups\u2063 and smaller businesses,\u200b cut their spending due to economic uncertainties caused\u2064 by the pandemic and \u200dinflation.<\/p>\n<p>Furthermore, WeWork \u200bfaced competition from traditional commercial property companies that began offering short and flexible\u2063 leases to\u2063 adapt to\u2063 the\u200c changing office sector. This\u2062 further compounded\u2064 the\u2064 challenges for WeWork.<\/p>\n<p>The filing for bankruptcy protection marks the\u2064 end of an era for WeWork. Under \u2062the\u2064 leadership \u2062of founder Adam \u2063Neumann, \u2062the company had \u2063become the most \u200cvaluable \u2062U.S. startup but\u2062 faced controversies\u200c and was eventually pushed out. SoftBank had\u2063 to increase \u200cits investment \u2062in \u200dWeWork\u2064 and appointed Sandeep Mathrani\u2062 as CEO in an attempt to\u2064 stabilize the company. Despite efforts to steer WeWork towards\u2062 a\u2062 successful\u200b IPO, the challenges proved insurmountable.<\/p>\n<p>As WeWork enters \u200dbankruptcy proceedings,\u2062 it \u200cremains to be\u2062 seen how the company will navigate this process and emerge from it. The restructuring support agreement with its lenders, converting secured \u2064debt into equity, provides some \u2064hope for WeWork&#8217;s future. However, the\u200d road to recovery\u200c will\u2064 likely\u2063 be challenging, considering the significant debts and uncertainties surrounding the\u200b office sector.<\/p>\n<p>In conclusion, WeWork&#8217;s\u2062 filing for bankruptcy protection reflects the company&#8217;s inability\u2062 to sustain its business model amid changing dynamics and\u2062 the \u200cimpact of the COVID-19\u200c pandemic. With the support of its lenders \u200cand SoftBank, WeWork aims to reorganize its business and emerge \u200cfrom Chapter 11 proceedings. However, the <a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/suspect-charged-in-rapper-tupac-shakurs-fatal-shooting-makes-first-court-appearance-in-las-vegas\/\" title=\"Suspect in Tupac Shakur's shooting appears in Las Vegas court.\">road ahead remains uncertain<\/a>, and WeWork will need to overcome \u200bsignificant challenges to regain stability and profitability \u200din the\u200b office sector.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>12:07 PM UTC \u2013 November 7, 2023 (Reuters) \u2013 WeWork, backed by SoftBank Group, filed for U.S. bankruptcy protection. The office-sharing startup&#8217;s downfall came as its investments in companies utilizing its space failed. This move acknowledges SoftBank&#8217;s responsibility.<\/p>\n","protected":false},"author":1911,"featured_media":2092646,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","fifu_image_url":"https:\/\/cndimages.nyc3.digitaloceanspaces.com\/breaking-news\/wp-content\/uploads\/2021\/01\/IMG_2758-scaled-1.jpg","fifu_image_alt":"","footnotes":""},"categories":[542],"tags":[],"class_list":["post-2092645","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-oann"],"fifu_image_url":"https:\/\/cndimages.nyc3.digitaloceanspaces.com\/breaking-news\/wp-content\/uploads\/2021\/01\/IMG_2758-scaled-1.jpg","_links":{"self":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/2092645","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/users\/1911"}],"replies":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/comments?post=2092645"}],"version-history":[{"count":0,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/2092645\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media\/2092646"}],"wp:attachment":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media?parent=2092645"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/categories?post=2092645"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/tags?post=2092645"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}