WeWork, an office-sharing company, filed for Chapter 11 bankruptcy on Monday in New Jersey federal court months after the company expressed doubts about its ability to stay in business.
WeWork announced the decision in a statement Monday, saying that filing for Chapter 11 The bankruptcy was part of a “comprehensive reorganization to strengthen its capital structure and financial performance.” WeWork said that holders that represent 92 percent of its debt have entered a restructuring support agreement with the company.
“Now is the time for us to pull the future forward by aggressively addressing our legacy leases and dramatically improving our balance sheet,” WeWork CEO David Tolley said in a statement. “We defined a new category of working, and these steps will enable us to remain the global leader in flexible work.”
This only affects WeWork’s US and Canada-based locations, the press release noted.
This comes after trading in shares of WeWork was halted on Monday as costs of its shares plunged. The Associated Press reported that shares of WeWork could have been had Monday for less than $1 — a shocking drop from when the shares cost more than $400 two years ago.
WeWork leases buildings to divide them into smaller spaces to sublet to its members, including freelancers, small businesses, and startups who do not want to pay for a permanent space. However, the company has signaled that it has been struggling in recent months.
“As a result of the Company’s losses and projected cash needs, combined with increased member churn and current liquidity levels, substantial doubt exists about the Company’s ability to continue as a going concern,” Tolley said in August.
The company had gone public in 2021 after initially failing to do so two years earlier. It was forced to delay its initial public offering in 2019 over questions regarding the company’s value and corporate governance.
The Associated Press contributed.