WeWork to enter Chapter 11 bankruptcy as soon as next week

By Reshmi Basu and Amelia Pollard | Bloomberg

WeWork is preparing to file for bankruptcy as soon as next week, according to people with knowledge of the matter.

The co-working company plans to seek Chapter 11 protection in New Jersey, said the people, who asked not to be identified because discussions are private. Talks are ongoing and plans could change, the people added.

Chapter 11 bankruptcy allows a company to keep operating while it works out a plan to repay its debts. It also opens up a basket of legal tools that can aid in a turnaround, like abandoning pricey leases.

WeWork has dozens of locations across Southern California.

Also see: WeWork sounds the alarm, prompting speculation around the company’s future

A WeWork spokesperson declined to comment. The Wall Street Journal earlier reported on the timing of the filing.

WeWork skipped interest payments on some bonds at the beginning of the month and on Tuesday disclosed a seven-day forbearance agreement with noteholders after an earlier grace period expired. It also said it would not make a $6.4 million payment due Wednesday on a separate bond.

The company and its backers, including SoftBank Group Corp. and bondholders including King Street Capital Management, have been locked in discussions over who will take the keys to the firm as part of its latest restructuring, Bloomberg previously reported.

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WeWork’s potential bankruptcy caps a rapid downfall for the firm, which in March struck a deal to slash $1.5 billion of debt in an out-of-court restructuring. As of June 30, the company had $2.9 billion of long-term borrowings, along with more than $13 billion of long-term lease obligations.

WeWork shares plunged more than 50% Wednesday morning to trade as low as $1.05. The stock has lost 98% of its value this year.