WeWork stock halted as rumors swirl about bankruptcy preparations for the office sharing company

The spectre of bankruptcy has hovered over WeWork for some time. In August, the New York company sounded the alarm over its ability to remain in business. But cracks had begun to emerge several years ago.

WeWork is paying the price for aggressive expansion in its early years. The company went public in October 2021 after its first attempt to do so two years earlier collapsed spectacularly. The debacle led to the ouster of founder and CEO Adam Neumann, whose erratic behavior and exorbitant spending spooked early investors.

Japan's SoftBank stepped in to keep WeWork afloat, acquiring majority control over the company.

Despite efforts to turn the company around since Neumann's departure including significant cuts to operating costs and rising revenue, WeWork has struggled in a commercial real estate market that has been rocked by the rising costs of borrowing money, as well as a shifting dynamic for millions of office workers now checking into their offices remotely.

In September, when WeWork announced plans to renegotiate nearly all of its leases, CEO David Tolley noted that the company’s lease liabilities accounted for more than two-thirds of its operating expenses for the second quarter of this year remaining "too high" and "dramatically out of step with current market conditions."

Last month, WeWork skipped hefty interest payments kicking off a 30-day grace period before an event of default. Last week, WeWork disclosed a forbearance agreement with bondholders that extended negotiations by one week prior to triggering a default.