Founded in 2010 by Adam Neumann and Miguel McKelvey, WeWork initially positioned itself as a disrupter in the office space sector. The company offers short-term rental solutions for collaborative workspaces to individuals and companies. WeWork's offices are characterised by a vibrant yet relaxed atmosphere, with bright, modern décor, and the unique offer of unlimited (!) alcohol in its offices. WeWork has deliberately positioned itself as more than just a provider of cheap office space and technology, but as a company striving to fulfil a "mission" to "raise the consciousness of the world". In 2019, Masayoshi Son's SoftBank valued WeWork at $47 billion, sparking an unprecedented buzz around the company.

However, signs of trouble began to appear as WeWork prepared for its 2019 IPO. In urgent need of funds, the company sought to go public that year. Nevertheless, the IPO was halted due to governance issues and poor financial performance within the company. This led to Mr. Neumann's resignation as CEO, following criticism of his unconventional management style. SoftBank stepped in and took WeWork public in 2021 with a valuation of $8 billion. 

Plagued by long-standing financial difficulties, WeWork Inc. and certain of its entities filed for Chapter 11 bankruptcy protection in New Jersey federal court on Monday, Novem-ber 6, 2023. WeWork's market capitalisation is now less than $50 million. As stated in the company's press release, the bankruptcy filing concerns only its U.S. and Canadian oper-ations. Currently in the red, WeWork faces billions of dollars in debt. Former co-founder and CEO Adam Neumann, while acknowledging the disappointment of the filing, remains opti-mistic about the possibility of a successful recovery through reorganisation.

The key aspect of the bankruptcy is that it is placed under Chapter 11, which allows the company to continue operations and restructure its assets, as opposed to Chapter 7, which would involve liquidation and a forced sale of its assets at discounted prices. WeWork has committed to a restructur-ing support agreement, backed by major financial players including SoftBank, aimed at significantly reducing its existing debt as part of the restructuring process. "They need to raise capital and resize their real estate portfolio, negotiating more favourable lease terms or rejecting lease terms. These are often the two drivers of a Chapter 11 bankruptcy filing," said Sarah Foss, global head of legal at Debtwire. 

Around 92% of the company's lenders have agreed to convert their debt into equity. The conversion is expected to eliminate around $3 billion of the company's total debt, which exceeds $18 billion. While significantly altering its operational structure, WeWork has not lost the support of key stake-holders such as SoftBank, which owns around 71% of the company, as well as hedge funds such as King Street Capital Management and Brigade Capital Management. These enti-ties have expressed their interest in taking control of WeWork during the bankruptcy proceedings and eventually becoming owners upon its emergence from bankruptcy.

After studying WeWork's accounts since its IPO, Rett Wallace, CEO of Triton Research Inc. pointed out that WeWork's business model was designed for long-term growth, which implied losses over several years. However, the real estate market has faced significant challenges, marked by interest rate hikes and disruptions caused by the pandemic. Although companies are advocating partial returns to office space, the overall vacancy rate remains high. This translates into signif-icantly lower prices, higher tenant turnover and weak rental demand across the office property market. Wallace points out that even with a compelling consumer value proposition, when faced with adverse economic conditions, economic factors "inevitably take over", shaping the trajectory of com-panies such as WeWork.

Tobias Kollewe, President of the German Federal Association of Coworking Spaces (BVCS), takes a different view, calling WeWork a clear case of mismanagement and arguing that the company's difficulties should not be attributed to the general state of the coworking industry. According to Kollewe, "coworking is a success story". Surveys conducted in the sector point to a notable increase in demand for short-term office rentals, reflecting a growing acceptance of hybrid working practices among businesses. A study carried out in June by CBRE, a global leader in commercial real estate and investment services, showed that European companies are increasingly keen on flexible workspaces. The results indicate that some companies are now willing to allocate more space to flexible offices than in previous years. 

Despite the current challenges, the prospect of a WeWork renaissance seems plausible, albeit within a more stream-lined framework. Analysts expect the company to survive by downsizing or merging with a competitor. The WeWork brand should survive even in the event of a merger. Thanks to the involvement of numerous stakeholders, including tenants and employees, the likelihood of WeWork disappearing altogether is considered low.