Chapter 11 Filing by WeWork Deals Another Hard Blow to the Already Fragile Office Market

The one-time behemoth of the coworking sector that grew rapidly and spent extravagantly filed for Chapter 11 bankruptcy protection on Monday, November 6th. Although highly anticipated for some time, the impact of WeWork’s filing to an already challenged office market will be significant with several of New York City’s biggest landlords among WeWork’s list of 30 of the largest unsecured creditors. Although lead shareholder and creditor Softbank has agreed to convert the “lion’s share of approximately $3 billion in debt to equity, relieving a huge source of financial pressure,” it is extremely unlikely that any of the 15 New York City landlords listed in the filing will be able to collect anything close to the approximately $53.2 million owed in primarily unpaid rent as well as a mix of related litigation and lease termination fees. In addition, 47 of the 69 leases that the firm is seeking the authority to reject are in New York City. Furthermore, the “figures in the creditor list may represent sums owed in the short term and understate the actual amounts owed landlords,” citing as example “a California landlord listed as being owed nearly $8 million has sued WeWork for walking away from $250 million in long-term obligations at a San Francisco location.”

Source:    https://www.crainsnewyork.com/real-estate/wework-owes-15-nyc-landlords-more-50m-breakdown