The bankruptcy petition lodged by WeWork in the United States follows years of financial difficulties for the co-working organisation.
The firm disclosed liabilities ranging from $10 billion to $50 billion (equivalent to £40.5 billion), as stated in a bankruptcy petition submitted to the federal court in New Jersey.
The filing provides WeWork with enhanced negotiating leverage with landlords and legal protection against its creditors.
WeWork, renowned for providing flexible rental agreements to freelancers and startups, was once considered the future of the workplace. But rapid expansion was utilised to conceal its exorbitant expenses.
The firm stated that WeWork Inc. and certain of its entities have filed for protection under Chapter 11 of the United States Bankruptcy Code and intend to file recognition proceedings in Canada.
David Tolley, the chief executive officer of WeWork, expressed his deepest gratitude to their financial stakeholders for their assistance as they collaborate to strengthen their capital structure and accelerate this process via the restructuring support agreement.
He mentioned that in order to support their community, their remain committed to investing in their products, services, and world-class workforce.
Early in 2019, investors had privately assessed the firm's value at approximately $47 billion.
WeWork shares were temporarily suspended from trading on the New York Stock Exchange on Monday, pending allegations of a potential bankruptcy filing. Each share of the company was last transacted for $0.84.
Companies that are listed on the New York Stock Exchange (NYSE) are obligated to uphold a minimum share price of $1.
The organisation faces the potential consequence of delisting from the NYSE if the value of its shares falls below $1 for a continuous period of 30 days.
WeWork experienced a decline in demand for co-sharing office spaces subsequent to a public offering in 2019 that proved unsuccessful, resultinged in damage to the company's reputation and the removal of co-founder Adam Neumann.
That was immediately followed by a pandemic that forced employees to work remotely from their residences due to the closure of numerous offices worldwide.
Operating expenses, in addition to other expenditures, contributed to WeWork's first-half financial deficit of over $1 billion.
The organisation has been frantically attempting to divest portions of its operations, close locations, and renegotiate the terms of its long-term leases and obligations.
As these discussions intensified last month, WeWork informed its investors that it would not be making loan payments.
SoftBank, a Japanese technology conglomerate and WeWork's largest shareholder, has invested tens of billions of dollars in the company as it has continued to incur losses.
As rumours of an impending bankruptcy petition surfaced, Mr. Neumann described WeWork's demise as "discouraging."
According to Mr. Neumann, it has become increasingly challenging for him to watch from the periphery since 2019 as WeWork has neglected to capitalise on a product that is more pertinent than ever.
He continued, "I am confident that WeWork will emerge victorious from a reorganisation with the appropriate strategy and team."
WeWork, which was established in 2010, asserted in June of this year that it has surpassed 700 global locations and has an estimated 730,000 members.