WeWork to Exit Chapter 11 Bankruptcy

Approximately six months after filing for Chapter 11 bankruptcy protection in November 2023, WeWork has secured approvals from the bankruptcy court judge of its latest reorganization plan and is expected to emerge from Chapter 11 in mid-June after administrative matters are wrapped up. Having resolved all disputes with “previously objecting parties,” including landlords, WeWork’s exit plan “would result in the company wiping out more than $4 billion of pre-petition debt in a debt-for-equity restructuring arrangement and cutting about $12 billion, or more than 50%, in future rent expenses.” Going forward, the co-working company will have $10 billion in lease obligations; and agreements reached with “stakeholders, including Japan-based investment giant Softbank, an ad-hoc group including asset manager BlackRock, and Cupar Grimmond, an investment arm of WeWork’s workplace management software partner Yardi, will enable WeWork to ‘tap $50 million in debtor-in-possession financing on an interim basis ahead of its bankruptcy exit,” plus “another $400 million at the time of its emergence from bankruptcy.” Additional agreements in the plan will result in “Yardi becoming WeWork’s majority owner with a 60% stake, because it’s providing most of the new investment, while the ad-hoc group plans to have about a 20% stake,” and Softbank’s stake will fall to 16.5% unless WeWork taps some undrawn letters of credit from the firm. WeWork will be consolidating its headquarters at 18 West 18th Street, where the entire office component totaling 167,000 square feet had been leased in early 2018 according to reports at the time but will have another office at 71 fifth Avenue. The company is hoping to turn profitable in 2025 with more than 170 wholly controlled locations in operations across the U.S. and Canada — the two countries where its bankruptcy case applies.

Source:    https://product.costar.com/home/news/1658699322