- Reports today suggest that WeWork is preparing to file for bankruptcy under Chapter 11 in the US state of New Jersey.
- At the time of writing, representatives from WeWork have failed to comment on the reports.
- The company’s second quarter earnings report from August hinted that its current model was no longer sustainable.
2023 continues to be a tough year for global co-working company WeWork, and it may mark the beginning of the end, as reports this week suggest it is preparing to file for bankruptcy.
Originally covered by the Wall Street Journal (paywall), WeWork is close to filing for Chapter 11 bankruptcy in the US state of New Jersey, although the company is yet to officially comment on reports at the time of writing.
If indeed true, it was a long time coming, however, as the company has struggled both during and in the wake of the pandemic, as many businesses and people opt for working from home instead.
As TechCrunch points out, in August of this year the company highlighted its dire situation during its second quarter results. It stated that, “substantial doubt exists about the company’s ability to continue as a going concern.”
“Excess supply in commercial real estate, increasing competition in flexible space and macroeconomic volatility drove higher member churn and softer demand than we anticipated, resulting in a slight decline in memberships,” the company’s CEO David Tolley noted at the time.
He added that he had faith in the, “successful execution of management’s plan to improve liquidity and profitability over the next 12 months.”
As it turns out, that plan does not look like it will take shape. The main issue of liquidity seemingly cannot be overcome, as earlier this week the company has already begun to engage with certain stakeholders over its capital structure and position.
Having recorded a net loss of $397 million in August this year, with the future of the company looking shaky at best. So much so, that at the time of writing, WeWork stock prices were down by 47 percent at one point today.
What the future of the company and its global operations hold remains murkier than ever. As for what it will mean for the three WeWork locations currently operating in South Africa, with two in Johannesburg and one in Cape Town, little has been shared at this stage.