WeWork’s plan of reorganization has been confirmed by the United States Bankruptcy Court for the District of New Jersey, a final step in the company’s operational and financial restructuring. The company expects to emerge from Chapter 11 in mid-June, following the completion of routine administrative matters.
Nine months ago, WeWork commenced its restructuring to address its high-cost, legacy lease portfolio and dramatically reduce its corporate debt. During this period, the company renegotiated hundreds of office leases with its landlord partners and closely collaborated with its largest creditors and other financial stakeholders.
“Due to the tireless efforts of our team, and the unwavering loyalty of so many of our members, we have completed our Chapter 11 proceedings with success well beyond our initial expectations,” David Tolley, CEO of WeWork, said. “In one of the largest and most complex restructurings, we have achieved extraordinary outcomes. Over the last year, we have also seen strong demand across the WeWork system and increased our member net promoter scores. Each of these achievements represents an exceptional testament to our people, our brand and our industry-leading service offerings.”
Through the approved plan, WeWork will:
- Eliminate more than $4 billion of prepetition debt, emerging debt-free;
- Reduce total future rent expenses by approximately $12 billion or over 50%;
- End the substantial operating losses that characterized the company’s years of hypergrowth and subsequent contraction;
- Secure $400 million of new equity capital to support operating investments and future strategic growth;
- Operate as a private company, owned by its prepetition secured lenders.
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“We have worked closely with the largest landlords around the world and one thing is clear: they believe in the future of the flexible office and they believe in the future of WeWork,” Peter Greenspan, global head of real estate at WeWork, said. “As global office demand continues to move toward flexible approaches, only WeWork has the technology, community and data to support landlords in creating truly outstanding offerings for modern organizations. We’re grateful to each and every landlord who came to the table to collaborate with us over the past nine months, and we look forward to building on our existing partnerships far into the future.”
