Parul
Global co-working leader WeWork has officially filed for bankruptcy in the United States and Canada, initiating a comprehensive reorganisation and restructuring process aimed at reducing debt and fortifying its financial standing. This comes as WeWork, once valued at $47 billion, reported a net loss of $696 million in the first half of the year. The company was valued at just $45 million last week.
Notably, WeWork’s international centers, excluding the US and Canada, will not be involved in the bankruptcy proceedings. In India, WeWork’s operations are managed by WeWork India, a venture primarily owned by Bengaluru-based real estate firm Embassy Group. WeWork India has consistently emphasised that global developments will not impact its business, boasting over 50 centers across the country.
Embassy Group holds a 73 per cent stake in WeWork India, while WeWork Global maintains a 27 per cent shareholding. In June 2021, WeWork Global invested $100 million in WeWork India.
WeWork Inc has officially filed for Chapter 11 protection under the US Bankruptcy Code and intends to initiate recognition proceedings in Canada under the Companies’ Creditors Arrangement Act. The locations outside the US and Canada will remain unaffected by this process, and WeWork’s franchisees worldwide are similarly unaffected.
The company’s reorganisation aims to strengthen its financial performance and capital structure, supported by a Restructuring Support Agreement with holders representing about 92% of its secured notes, aiming to significantly reduce its existing funded debt.
WeWork Inc will continue to streamline its commercial office lease portfolio while focusing on business continuity and maintaining services to its members. Global operations are expected to continue without disruption.
David Tolley, CEO of WeWork, emphasised the need to address legacy leases and improve the company’s balance sheet, acknowledging the global portfolio that included 610 locations across 33 countries.
WeWork India, however, has assured that its operations will remain unaffected by the global bankruptcy proceedings. In a statement, WeWork India CEO Karan Virwani clarified that WeWork India operates independently of WeWork Global and is not part of the strategic reorganisation process, ensuring no impact on its operations.
Virwani highlighted the Embassy Group’s commitment to investing in the future of WeWork India’s business and the company’s strong financial performance, which has been profitable since 2021. WeWork India reported a 40 per cent revenue increase to Rs 400 crore during the first quarter of the fiscal year, with a total turnover of Rs 1,400 crore in the last fiscal year.
