WeWork files for bankruptcy in the U.S., recognition proceedings in Canada

WeWork announced that it has commenced a reorganization to strengthen its capital structure and financial performance. The company has entered into a restructuring support agreement, or RSA, with holders representing approximately 92% of its secured notes to reduce the company’s existing funded debt and expedite the restructuring process. During this period, WeWork will further rationalize its commercial office lease portfolio while focusing on business continuity as global operations are expected to continue as usual. WeWork and certain of its entities filed for protection under Chapter 11 of the U.S. Bankruptcy Code, and intend to file recognition proceedings in Canada under Part IV of the Companies’ Creditors Arrangement Act. WeWork’s locations outside of the U.S. and Canada are not part of this process. WeWork’s franchisees around the world are similarly not affected by these proceedings. WeWork has a lease rejection plan that is expected to position the company for operational and financial success. As part of today’s filing, WeWork is requesting the ability to reject the leases of certain locations, which are largely non-operational and all affected members have received advanced notice. WeWork is filing with the court a series of customary “First Day Motions” to facilitate a transition into the process and to support operations throughout its cases, which it expects to be approved in short order. The company will continue servicing its existing members, vendors, partners, and other stakeholders in the ordinary course of business. WeWork expects to have the financial liquidity to execute these proceedings and continue business in the ordinary course.