Devendra Kumar
WeWork’s shares were halted on Monday due to rumors that the company will seek bankruptcy protection. The office-sharing company was once valued at $47 billion, but its struggles have led to a significant decline in its stock price. As recently as September, WeWork said it was on course to occupy most of the former Central Bank of Ireland building in Dublin 2, but it has since been seeking to renegotiate nearly all of its leases around the world and leave some buildings it currently occupies.
WeWork’s troubles began several years ago, when it underwent an aggressive expansion. The company went public in October 2021 after its first attempt to do so two years earlier failed 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, WeWork has struggled in a commercial real estate market that has been rocked by rising costs of borrowing money and a shifting dynamic for millions of office workers now checking into their offices remotely. In September, WeWork’s 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”.
The company has also struggled with interest payments, skipping a hefty payment last month and 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. With the specter of bankruptcy looming, WeWork’s shares were trading at less than $1 on Monday, a far cry from their peak value of over $400 two years ago.
WeWork’s struggles have been a source of concern for its stakeholders, including its employees and bondholders. The company has been a major player in the Dublin office market, occupying space at several buildings in the city, including the 2 Dublin Landings building in the docklands and the Charlemont Exchange near the Grand Canal. However, its financial struggles have raised questions about its long-term viability. With the company’s stock price plummeting and its debts mounting, it remains to be seen whether WeWork will be able to recover and emerge as a viable business or whether it will succumb to the pressure and file for bankruptcy.