A U.S. bankruptcy judge on Thursday approved WeWork's Chapter 11 bankruptcy plan, allowing the shared office space provider to eliminate $4 billion in debt and hand the company's equity over to a group of lenders and real estate technology company Yardi Systems.
U.S. Bankruptcy Judge John Sherwood approved WeWork's restructuring at a court hearing in Newark, New Jersey. With that approval, WeWork will be ready to exit from bankruptcy with no debt "in a matter of days," WeWork attorney Steven Serajeddini said at the hearing.
Flexible workspace provider WeWork expanded at breakneck speed but racked up steep losses on its over-extended real estate portfolio before filing for bankruptcy protection in November 2023.
WeWork used its bankruptcy to negotiate a significant reduction in future rent costs from its landlords and cancel leases at about one-third of its locations, ultimately reducing its future rent costs by more than $12 billion. WeWork expects to operate 337 shared office spaces after its bankruptcy, with more than 170 locations in the U.S. and Canada.
"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," WeWork CEO David Tolley said Thursday.
WeWork rejected an alternate buyout proposal offered by its co-founder and ex-CEO Adam Neumann. The company said Neumann did not offer a high enough price to win over WeWork's lenders, who preferred to take an equity stake as part of the bankruptcy deal.
WeWork's restructuring will cancel existing equity shares, but top shareholder SoftBank will retain a minority equity stake on account of loans it provided to WeWork. The company, once valued at $47 billion, estimates that its post-bankruptcy equity is worth about $750 million.
Despite its fast growth, WeWork never turned a profit, and its reputation suffered after a failed initial attempt to go public in 2019. Its proposed initial public offering imploded spectacularly after investors questioned the company's hefty losses and balked at Neumann's management style and corporate governance lapses.
WeWork eventually went public through a merger with a blank-check acquisition company in October 2021, but its losses deepened in recent years as the COVID-19 pandemic caused a long-term decline in demand for office space and a massive shift toward employees working from home.
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