WeWork Finally Files for Bankruptcy two Years after Going Public via SPAC. Office Landlords, CMBS Holders Face the Music, Stockholders Wiped Out

Spent its entire life burning $13.8 billion of investor cash. Landlords got free manna from heaven and can’t complain. A good scheme while it lasted for everyone but investors.

By Wolf Richter for WOLF STREET.

WeWork has finally filed for Chapter 11 bankruptcy in New Jersey Federal court after it had spent its entire life burning huge amounts of cash raised from investors – a total of $13.8 billion raised in 22 rounds, much of it from SoftBank and SoftBank’s Vision fund, and after more recently stiffing office landlords left and right.

The title of its press release about the bankruptcy filing is a typical WeWork hoot; even in bankruptcy, it could not let go of the ridiculous hype-and-hoopla show:

“WeWork Takes Strategic Action to Significantly Strengthen Balance Sheet and Further Streamline Real Estate Footprint.”

The title was also an indication of what’s in for office landlords and holders of Commercial Mortgage-Backed Securities (CMBS). During the bygone era when companies were hogging office space that they thought they might grow into, WeWork created huge demand for office space, contributing to the notion of the office shortage that caused more hogging of office space.

Reality has now set in, leaving cities with the greatest glut of vacant offices ever, and WeWork is adding to that glut by using the bankruptcy process to get out from its unwanted office leases – that’s what “further streamline real estate footprint” translates into. Office Landlords and CMBS holders are in a world of hurt.

Lease obligations out the wazoo. According to its last quarterly 10-Q filing with the SEC in August, WeWork has $18.6 billion in liabilities, including:

  • $14.1 billion in current and long-term lease obligations
  • $2.9 billion in long-term debt.

In the press release about the bankruptcy filing, WeWork said that it “has a deliberate and value maximizing 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.”

As the WeWork jitters were already raging in CMBS land in 2019, CMBS analytics company Trepp noted that WeWork was “a top-five tenant at 36 office facilities behind more than $3.3 billion in CMBS debt across 50 deals.” WeWork loans account for about 4% of all office-backed loans in CMBS.

WeWork is one of the most brilliant heroes in my pantheon of Imploded Stocks if you count down from the fake $47 billion “valuation” that SoftBank was able to stick on it behind closed doors in 2019.

WeWork’s early investors and public shareholders have already gotten wiped out. Its IPO in October 2019 was scuttled due to “market conditions,” meaning scandals and losses all over the place. At the time, WeWork still had a “valuation” of $47 billion, in a masterpiece of SoftBank engineering that then vanished.

Two years later, in October 2021, as SPAC mania was already fizzling, and as my pantheon of Imploded Stocks was already densely populated, WeWork, after disclosing it had lost $3.2 billion in 2020, went public via merger with SPAC. I have no idea why anyone went for it. But people did.

Before the merger with the SPAC closed in October 2021, shares were trading at around $10 a share – or at $400 in today’s terms after the 1-to-40 reverse stock split. Shares then spiked, and then kathoomphed. In August 2023, WeWork announced a 1-for-40 reverse stock split to kick the delisting-can of its shares down the road. And then shares kathoomphed further.

On Friday, shares closed at $0.84. Without the 1-to-40 reverse split, that amounts to 2.1 cents. On Monday, shares were halted. Monday evening WeWork filed for bankruptcy. So at $0.84, shares have lost 99.9% of their value. There will be nothing left for shareholders when the bankruptcy process is done.

In terms of the holders of the secured notes – they’re the one that have the upper hand in bankruptcy court – WeWork said that it has entered into a Restructuring Support Agreement with about 92% of them “to drastically reduce the Company’s existing funded debt and expedite the restructuring process.”

The US bankruptcy filing pertains to the company’s operations in the US. The Company said that in terms of its operations in Canada, it will file recognition proceedings under Part IV of the Companies’ Creditors Arrangement Act. Its operations in China are already independent and are not affected by the bankruptcy: In September 2020, WeWork had sold a majority stake of its operations in China to existing shareholder Trustbridge Partners for $200 million.

But landlords got the free manna from heaven and cannot complain. They and their lenders – mostly CMBS holders – will get shafted; many of them have already gotten shafted after WeWork stopped paying rent. A number of landlords have sued WeWork for unpaid rents. And that $14.1 billion in lease liabilities that was due landlords will get slashed in bankruptcy court. WeWork will keep the leases it wants to keep and shed the rest.

But they cannot complain because they had it so good for so long. WeWork came along and threw billions of dollars of other people’s money at them, paying ridiculously high rents, thereby driving up rents for other companies, and landlords were all too happy to take this money and run with it.

The scheme didn’t work out, and many of the landlords probably figured as much when they entered into the leases with WeWork. The whole thing was big obvious scheme from get-go. But what the heck, at the time, money was free, and there was a shortage of office space, and they could always find someone to pay even more for the office space. A big portion of that $13.8 billion that WeWork raised from investors ended up in the pockets of landlords. So they should count their blessings that they got this manna from heaven for as long as they did.

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  94 comments for “WeWork Finally Files for Bankruptcy two Years after Going Public via SPAC. Office Landlords, CMBS Holders Face the Music, Stockholders Wiped Out

  1. Phoenix_Ikki says:

    Congrats Adam Neumann, you did it, don’t forget the enabler Masayoshi Son, spectacular work here…really great example of conman latching onto dumb money…

    Speaking of dumb money…looks like Neumann already got another dumb money sucker lined up to the tune of $350M from Andreessen Horowitz. Packaging another RE con cow turd in different wrapping..perhaps Hulu needs a sequel to his mini-series in the future.

    To think all that dumb, fomo hype money and spending it for the benefit of our society like infrastructure, education..reform..etc…nope that would be too logical.

    • Dave says:

      Capitalism NEEDS impartial/uncompromised regulatory agencies to contain the inevitable manipulation and greed we humans bring with us.

      Otherwise you get this BS

      Unfortunately money corrupts everything, including regulator agencies and politicians.

      Kobayashi Maru…..

      • elbowwilham says:

        No it doesn’t. It just needs these people to lose money and not get bailed out. If you take away the free money, you wouldn’t have this issue. If all these speculators keep losing money, eventually the problem solves itself.

        • anon says:

          elbowwilham is 100% correct.


          Throughout Financial History cheap (or free) money has caused numerous problems.
          It seems great for a bit and then reality catches up.

        • Escierto says:

          You are exactly right. The problem isn’t capitalism because that’s not what we have now. Losses are socialized and gains privatized. Maybe we should try capitalism and see how it works.

        • WB says:

          Correct. The first rule of capitalism is that you respect capital and allow those that mis-allocate capital to actually FAIL and have their assets SOLD to pay off creditors etc.!!!!!

          A functioning legal system also helps (MBS were technically illegal when created) to insure those responsible for fraud actually go to prison.


          The bottom line is if you continue to reward bad behavior, you most certainly will get more bad behavior.

          In this case, I do think we are just beginning to see the system work correctly. However, we have a long, long, long way to go, and the odds are high that the damage gets to someone who is politically connected eventually. Capitalism has been long dead for the most part.

        • Gaston says:

          I’m jumping on this bandwagon because I thinks it’s important and I often see similar comments on “the need” for regulation.

          The existing issues of speculation existed because of regulation (which in this case was artificially low interest rates and huge non-recourse government “loans”). This flooded the market with cheap money and allowed inappropriate risk taking.

          Don’t blame capitalism for the consequences of market manipulation.

        • rojogrande says:

          Excellent point. What’s the saying: capitalism without bankruptcy is like christianity without hell.

        • CoastalKyle says:

          “If you take away the free money, you wouldn’t have this issue.”

          Every time I read statements like this I have to shake my head. The culture of capitalism encourages greedy behavior and there will always be bankers/big businesses that are more than happy to bribe/beg/borrow influence to get access to free money. There is this perverse notion of “we are not doing capitalism, we should try real capitalism” but this is capitalism. Late stage capitalism, but still capitalism. Unless there was a revolution I missed in the last hundred years where every day Americans rose up and threw off the shackles of capitalism, we’re still in capitalism.

          It just didn’t turn out like how people had hoped.

        • Phoenix_Ikki says:

          @CoastalKyle Bravo for what you just said, many missed this point or perhaps just willfully ignore it completely.

        • Gaston says:

          There is no such thing as “late stage capitalism”. Usually that is touted to explain the consequences of cronyism.

        • Burt Reynolds Wrap says:

          I’ve heard it said before that “Capitalism is essentially…..survival of the economically fittest.” It shouldn’t be necessary to say this but for those not understanding the point of this, it equates to a pseudo-Darwin system of human survival in an artificially bounded human devised system. This also implies that it is not static and can progress, it can amplify. CoastalKyle brought up the idea of ‘late stage capitalism.’ This idea of economic survival of the fittest would logically devolve (progress ?) into what we currently have, which is the upper echelons of this predator-like hierarchical pyramid structure amplifying their standing as they consolidate their positions after beating out (fair or not, that’s opinion) the other competitors (fellow humans). It always seem to me that capitalism would eventually evolve into an oligarchy or fascism because it seems to have more elements that promote consolidation than it does diversity. It seems the diversity must be regulated into the system but that would mean that the system does not have a basis that functions as people would like, which is to spread out the concentrations of wealth and power more than what people usually experience. A less regulated capitalistic society should devolve (evolve, change) even faster to reach the state of oligarchy. I personally don’t worship capitalism or any particular economic system. I see the benefits and negative things about different systems. No one system will meet everyone’s expectations, but I do think most societies that are highly dependent on industrialization are sure to collapse eventually due to the chemical pollution related to those ways of living causing lower IQ, more social problems, lower birth rates, population-wide health problems, and a distrust of your own food and other things that should be things you can fundamentally feel good about. I think agrarian societies have served people just as well as capitalism had, but they are different and not directly comparable in many ways. So I’m just a boat on the sea riding the waves. Oh, and for those who think they are doing good now and are in the upper echelons of that societal and economic pyramid, well the bad news is that unless you are at the actual top of the pyramid too, you will know your place as well because eventually the system will devolve into either civil war, a techno-police state, or a strange societal collapse that resembles the decay and strange and sad occurrences brought on by mental illness. For that case, it’s like the comedian Bill Burr said about wanting to collect supplies in case there is a disaster and have his personal home prepared, and then he realized………….”All I’m doing is collecting all this stuff for the guy in the neighborhood with the most guns to just come and take from me.” That’s exactly it though, in the later stages of capitalism, things fall apart and the people low down on the pyramid start kicking in doors to take people’s stuff (home invasion). I think those with the power can see all of this and, over the last 23 years now, have been implementing such a techno-police state. Some of the features of this would be gated communities, police only protecting some people, massive surveillance of the general population, suppression of leadership thinking, control and manipulation of information and opinion (media), debasing and substitution of currency, moral decay and hostility towards community members and other people in general. Talk about mr negativity here…………jeesh. I respect the Amish for not selling out. I hope the people around the world who live somewhat like they do will still be okay when our systems fall apart because they deserve it for putting in the work and not investing their life in a man-made system that is obviously corrupt due to human nature and ignoring logic and morality.

      • cas127 says:

        Some more regulation wouldn’t be the end of the world, but the other posters are right that the G expropriating USD savers (ZIRP for essentially 20 years) was the igniter, sustainer, and rocket fuel for most of the asinine, occasionally corrupt “startups”/”projects” that incinerated billions and billions and billions to no useful end.

        In WeWork’s case, local taxing authorities have long, long had a pretty damn incestuous relationship with major RE holders in their locales.

        Property taxes are the major source for local taxing authorities (and their teacher union clients), so they were basically sharing the loot (and looking the other way) when WeWork’s BS propped up office buildings that would have otherwise been devalued a *lot* earlier (and over time) if WeWork hadn’t come in with its accounting dipsy-doodles and moron money.

        So you had those local governments rooting for/working with the WeWorks of the world…otherwise they would have had to adapt to less tax revenue…sooner. And *that* is verboten.

        • Greg Nikolic says:

          And let’s not forget that WeWork sold a suite of living dreams to small business operators that went down the tubes with the bankruptcy. It’s not just that the leases will now be terminated; the large numbers of dependent smallhold leasers will be kicked out of the buildings they had been counting on for long months if not years . . .

        • Burt Reynolds Wrap says:

          I like you analysis because it gets into the finer details of driving factors.

  2. Phogetaboutit says:

    Maximum value extraction and no jail time. Well played, well played indeed.

    • Phoenix_Ikki says:

      Well, unfortunately this is a feature and not a bug in our current system..good times

      Plus we already got SBF, so from a social justice perspective, one big one every decade of so so the public will feel like justice is served and calm down just long enough for more clowns like Neumann to flourish..

      • Gaston says:

        SBF committed a crime. WeWork, as far as I know, didn’t. From what I read, they were open about their business model and people believed it. The market worked as designed.

        • 91B20 1stCav (AUS) says:

          …other than the name should have reflected reality, mebbe something like ‘We’ll Walk’…

          may we all find a better day.

      • CCCB says:

        Too bad they won’t claw back the tens or hundreds of millions Adam Neumann got paid to leave his clown show.

        Although SoftBank and the other funding idiots deserve to lose their investments, it just doesn’t seem right to see the ringmaster of all this money destruction walk away unscathed

    • kam says:

      If Wall Street had funded a functioning economy, instead of short-term scams…
      Like Rome, the Eastern Empire (Constantinople/New York) and the City of Rome (DC) partied on, as the foundations were torn down and sold off.
      WeWork, WeSteal, WeGone.
      And the best part of this Historical Disaster? One of the few things, genuinely made in America.

  3. Island Teal says:


    • Caveman says:

      The Airbnb of office space goes down.

      Breaks my heart.

      • sufferinsucatash says:

        When you meet with a wework renting small biz.
        “Yeah it’s great here, communal coffee, communal tables, communal pens.”

        “So like jail huh?”

        (Not listening) “so uh yeah what did you email about? I took the bus here and watched a Ted talk my fifth pyramid mentor did. He’s such a go getter.”

        “I’m leaving”

        • Arizona Slim says:

          Former coworking tenant here. I remember these types very well.

          And I also remember the Koolaid-drinking coworking space manager who went to work for WeWork in CA. That was in early 2019. She was out of a job before the end of the year.

        • Burt Reynolds Wrap says:

          sufferinsucatash………….literary gold flakes, thanks for that.

  4. Doctor_ECE_Prof says:

    When I read the name Softbank Vision bank, the holding company of our want to be our president wiz kid, Vivek Ramaswamy’s Roivant Sciences (never profitable; some holding company for many vants that imploded — Axovant for Alzeimer one of them). SBVB that stupid or are they partners in this mega swindling, also known as SPAC vehicles?
    What has happened to this great country? We went from number one in manufacturing to number one in shady financial engineering.

    • John H. says:


      You mused: “What has happened to this great country?”

      As a partial antidote to your despair, you might read the New Yorker article from 2017: How Mark Twain Tried to Get Rich Quick—Again and Again.

      The article demonstrates that swindles and swindlers have been with us throughout history. Perhaps the prevalence of schemers is partly due to the existence of get-rich-quick investors in every generation?

      A case of supply meeting demand!

    • Brant Lee says:

      This is a picture of the whole stock market for me now. Along with stock buyback, algorithms and much of the present market are still built on 0% loans. It’s a house of cards. Good luck out there.

  5. Gen Z says:

    From USD$300 to a peak of USD$520 in 2021 to USD$0.84 today.

    A lot of people got burned real badly…

  6. TrBond says:

    Another example of what happens when the Federal Reserve makes money free (and prints $5 Trillion to fund deficits) for a decade +.

    This is also another example of the interesting work Wolf does.

  7. Jason B says:

    Doomed to fail from the start. The prices for a regular user for a few hours a day were much more expensive than renting a studio apartment. Not sustainable.

    • ru82 says:

      Yep. I was very disappointed the IPO never occurred. It was going to be a great short.

  8. Jason B says:

    If any of you have a crappy business idea and need money, go to Softbank. You can get a couple hundred millions.

  9. Mark says:

    Now do Moderna (unless that’s too close to home…..)

    • Wolf Richter says:

      Moderna’s share price is still $72, and it still has a valuation of $28 billion. While that’s down 85% from the peak, it has a lot more room to fall.

    • Jason B says:

      Any company can go bust, including Moderna. But at least Moderna promises some new technology. It may still fail, but it is definitely different from WeWork, which is essentially the ancient real estate business with an online make-up. Nothing new.

    • Phoenix_Ikki says:

      Nah, try Beyond Meat first…Vinfast is another good one, both of these are a riot..

      You also don’t need to look too far in Biotech/cell therapy space to find some spectacular fall from grace. Try Bluebird Bio, Instil Bio..etc, both fell from the top and hot every branch down along the way..

      Then there’s Fintech like Dave…etc..man I can go on forever..

      • RichardW says:

        I like Beyond Meat’s product (though I only buy it when it’s heavily discounted). But the hype was ridiculous. It’s just a superior vegeburger.

        • bulfinch says:

          I’d say inferior—have you looked under the hood at what’s actually in that stuff??

  10. phleep says:

    If you create enough cash and credit, the termites will feast. The price of risk, so, risk itself, becomes some sort of joke. Until it doesn’t.

  11. phleep says:

    This could have been, prospectively, a somewhat credible bet on a certain future state of the world, that didn’t materialize. The pandemic was one huge speed-bump for that. The social-business world swerved elsewhere. But as usual in our entrepreneurial hype-crazed society, the now seemingly obligatory presence of a few complete weirdos, plus bizarre numbers and hype-stories, add some unsavory spice.

    • Buffalo Billion says:

      Perhaps. But I tend to think of WeWork’s potential success like this:

      The United States has deluded itself for decades about success. Politicians have encouraged everyone to go to college as public school outcomes have devolved. Everyone wants to get rich. Based on social media, television, political speeches and parents, one might think that people honestly believe every person in America should be a doctor, engineer, lawyer or rich inventor.

      The reality is that nations need carpenters, cooks, cleaners, etc. WeWork was tandem to this irrational delusion. In no world will we need every person to rent a personal office. The numbers never added up and there were always rational people in the sector WeWork was trying to disrupt that discussed this.

    • Josh T says:

      WeWork had problems pre-pandemic. My buddy took a job there in their corporate office and jumped ship quickly. They were paying real estate brokers 100% commissions on 1 year leases. They also had leases with coffee bars in some of their locations they never got around to collecting the rent on.
      In a separate but similar idea. I have signed a dozen retail commercial leases and it seems to me that the landlord sees the rent and the incentives in two separate categories. Maybe they report the value of the rent cash flow to Wall Street, without the incentives. I signed a lease where the tenant improvement allowance and free rent was close to 2 years of value on a 10 year lease. Maybe someone in commercial real estate can verify how the accounting works.

    • ApartmentInvestor says:

      @phleep the “concept” of renting the same office space to multiple people is not a new one (I rented co-working space in an “executive suite” in the 80’s). I have a note in Outlook that I got invited to a Belden Club (SF Bay Area RE Club) to learn about WeWork in 2017 (I didn’t go). In 2019 I made a note that they were expanding too fast and doomed to fail (extra doomed because I found out that they were overpaying for almost every lease and super overpaying for stuff that founder Adam Neumann personally owned and was leasing to the company).

      • cas127 says:

        Like so many startup ideas, sharing pricey office space is not a bad idea at the most basic, granular level. Those “gateway” city landlords have been gouging for decades, and decades, and decades.

        But coked-up hypester con-men elbow to the front of the funding line and sell million-dollar market spaces (shared office space) at billion dollar valuations – which must inevitably collapse.

        And it wasn’t like the *exact same concept* had not been tried, boomed, imploded, and hobbled back before – not that many years earlier.

        *That* aspect (that WeWork was essentially coked-up executive suite rental) is the amazing part. How any pro could think it even *might* be worth tens of billions is inconceivable.

        (And, I suspect, why its first attempted IPO blew up on the launch pad).

      • bulfinch says:

        Any such notes of clairvoyance squirreled away regarding Neumann’s latest venture, ‘Flow?’

  12. Citizen AllenM says:

    Once again, leverage giveth and leverage taketh. Long Term Capital is totally forgetting risk. Again. Well the redistribution was sweet for a time. Now comes the tears.

    In short, so many capital grifts are going to the wreckers, that Wolf will need pages and pages to list them by the time we see less than 4percent rates. If I live so long.

    How long until prime goes subprime? What happens when houses become crappy investments?

    How many companies have zombie capital structures?

    • WB says:

      “How many companies have zombie capital structures?” …

      All the world’s a giant ponzi at this point, can you even have a “capital” structure in a world that is using 100% fiat? I don’t think so. The “capital” in capitalism are real productive assets and resources. The monetary system must reflect this in order for the system to work. This capital must be respected, and risk MUST be accurately priced. Neither of these last two essential requirements have been in play for some 40+ years. I agree, Wolf may need to hire some assistant to keep up with the coming destruction.

    • MM says:

      “What happens when houses become crappy investments?”

      If you recently bought a house to speculate on (as opposed to live in), I’d argue that most likely is a crappy investment.

  13. pmbug says:

    Ponzi schemes go up and up until they don’t. Then they go down hard.

  14. Anthony A. says:

    I wonder if there was any money put aside for huge executive bonuses before making the BK filing?

    • Wolf Richter says:

      There always is — in order to “retain” the management team.

      • Andrew Dibb says:

        Gosh yes. Wouldnt want to lose them would we?

      • WB says:

        Why would you want to retain a management team that failed and drove the company into bankruptcy?

        When I worked in Biotech the CTO always said that “they were paid so much because they took all the risk”…

        Were they lying? I think I see the problem Wolf!

        • Wolf Richter says:

          You’re looking at it the wrong way: It’s management that decides to pay bonuses to management to “retain” management. And the board goes along (what else are they going to do, run it themselves?).

          In bankruptcy court, the supervision of the board ends, and they’re out. But they may also have paid themselves some bonuses to “retain” themselves until the bankruptcy filing.

          Creditors now are in charge of the company, under the supervision of the court, and since they made a restructuring deal before the filing, I assume they can work with current management during the transition. But ultimately, the creditors will decide who runs the place.

        • info says:

          What would be the impact of stripping Corporate Personhood from erring companies?

    • kramartini says:

      The only thing worse for the bankruptcy estate than paying massive bonuses to the management team is having them walk away…

  15. Nissanfan says:

    One down, many more inflated bubble stocks to go…

  16. Debt-Free-Bubba says:

    Howdy Folks. So, how does that saving your money story go ? Stupid to save $$$ because inflation is higher???? HEE HEE. Stock Boys are silly without their ZIRPee and QEee……

  17. Next Shoe To Drop says:

    Leverage works wonders on the way up, i.e. when the Fed lowers the FFR and everyone else follows suit so dumbasses can load up on cheaply financed debt, but it sure can be hell on the way down when the Fed finally acts responsibly!

    Congrats to any Diamond Hands that bought in the 1st year, and subsequently HODL’d during the gravity phase of this illustrious company’s existence.

  18. SpencerG says:

    Chuckle… it is nice to see that their PR people still have jobs… so far.

  19. William Leake says:

    Bankruptcy laws need to change so that all personal assets of all administrators of the failed company over the past five years can be taken.

    • SoCalBeachDude says:

      The very purpose of corporations has ALWAYS been to prevent personal assets of owners and administrations of corporations to have no personal liability for losses of the companies they are involved with and that goes back to the very origin of corporations under state law.

      • William Leake says:

        I put the limit at five years. lol. People need to be more responsible for their actions.

  20. Not Wolf says:

    Thanks for always keeping us updated on this topic!
    You convinced me to buy puts in some real estate investment companies before this news broke

  21. Neel Kash & Kari says:

    The whole thing SPACs, vulture capital, etc is the fault of ZIRP policy. As long as money is free the private and public sector will burn it in huge amounts.

    • kramartini says:

      The time value of money is free but debt still matures and needs to be paid back.

  22. Nick Kelly says:

    Let’s see: lease a big space and then lease little bits at a much higher rate per foot? Of course this is fundamentally the commercial RE gig to begin with and there was a fairly large co doing almost the same thing as WW, basically desk space rental, avail weekly or…

    It’s hard to think of such a successful, albeit briefly, re-packaging of a very old biz.
    At least the dot.com bit, AOL etc. WAS new at first.
    Was it just loose money looking for something, anything? The word ‘tech’ stuck on?

    One for the books.

    • SpencerG says:

      TWO THUMBS UP!!!

      There will always be profits to be made by people willing to do sorting and marketing in different sizes… NEWS FLASH… Chickens don’t have eggs a dozen at a time.. to say nothing of sorted by size.

      That said… how on Earth was this ever a $46 billion business? If there was that much business to be had by subletting commercial space in smaller increments then the landlords would do it themselves.

      • ApartmentInvestor says:

        @SpencerG anyone that has been in office real estate for years knows that there is “some” demand for co-working space just like anyone in the residential real estate business knows that there is is “some” demand for short term apartment rentals. Both are labor intensive niche business that don’t scale well. The hip VC with a cool downtown Palo Alto office can make a great above market rent psf renting a couple unused offices as co-working space just like a friend of my wife does real well (getting a higher rent psf than any of my apartments) renting a former barn below her home in Woodside (not far from her chicken coop) on a short term basis to mostly guys out working on Sand Hill Road.

      • dougzero says:

        how on Earth was this ever a $46 billion business?
        I believe the operative phrase is “Consensual Hallucination”.

    • Einhal says:

      Because Adam marketed it as a “tech company,” when as you said, it was just a real estate sub-leasing company.

      The problem is that there’s nothing proprietary about their model. The building I work in has half a floor dedicated to shared space, and they lease it out directly. No need for a WeWork middle man.

  23. SoCalBeachDude says:

    Why did this bankruptcy go on for so long? Is this a Chapter 7 liquidation or are they going to try to reorganize this wreckage yet again?

    • Wolf Richter says:

      Chap 11 reorganization. They’re getting rid of their unwanted leases, maybe $10 billion in lease obligations, and the secured note holders have agreed to make a deal, and they’ll end up with the company. So this will be a much smaller outfit with less debt. Maybe they can make it work, or maybe they’ll file again in the future (what’s jokingly called Chapter 22).

  24. LoanWolf says:

    Kathoomphed. Love it. Classic Wolf.

  25. WB says:

    Yes, a lessee can reject leases in bankruptcy but the landlord has a general unsecured claim equal to (i) pre-petition arrearages and (ii) rejection damages equal to the greater of rents due of one year or 15% of the rents for the remaining term.

  26. working man says:

    we’re finding out again that water is indeed wet

  27. kramartini says:

    Since we are on the topic of bankruptcy, it might be a good time to revisit Yellow’s bankruptcy now that there is apparently an offer from Jack Cooper to revive Yellow as a going concern.

    • Wolf Richter says:

      My understanding is that they would just be buying the assets and accept some of the liabilities. They wouldn’t be buying the “going concern.” That thing is gone. It’s no longer going. Though the Senator’s letter to Yellen mentioned that phase, which is confusing.

      BTW, it’s “a long shot,” they said. Cooper is perhaps just angling for government subsidies.

      • kramartini says:

        I agree that the Jack Cooper proposal is absurd. But it is supported by 7 US Senators who want the Treasury to extend the maturity of the $700 million government loan that is about to be repaid in full with interest (currently running at over 8.5%–SOFR + 3.5%). And the bankruptcy code does require the court to favor a lower bid that would preserve union jobs over of a larger bid that would provide more money to the bankruptcy estate but would not preserve union jobs. In a rational world this offer would not be taken seriously by anyone, but in our Alice in Wonderland reality it should not be ignored…

  28. Imposter says:

    So called “investors”. They ended up exactly where they belong, on the receiving end of a bankruptcy notice.

    Wolf’s great “pantheon of imploded stocks” is one of the best running articles going. Love it, and look forward to his next installment. I have little doubt that these episodes will continue for quite some time.

  29. Eddie Leong says:

    We Work went bankrupt because not enough business customers wanted to rent expensive co-working space. Just means that many decide they can work from home, far cheaper to buy a coffee and use luxury hotel lounges for hours, etc. Free meeting space too…just coffee and tea as those lounges are mostly empty during the day. Hotels make by selling rooms..

    I walk down prime business district in Singapore and see huge banners…For Rent…at street level and empty commercial spaces. What about upstairs if street level is begging for people to rent?

    Tells me…the world is in deep trouble. The days of frequent travels, expensive hotels, etc. are over. We can zoom, sign contract via Internet, etc. We can work from home, from hotel lounges, etc. No need to meet up that often.

  30. Eddie Leong says:

    Landlords are going to claim business losses and reduce their income taxes. Landlords can also declare bankruptcy and banks losses. Developers have made their profits after selling the development. All others down the line take some share of the losses.

    Suppliers, logistics, utilities, maintenance, even cleaning services and security, etc. all will lose business. The ripples will spread.

    Unemployment goes up.

  31. Imposter says:

    A bit of irony from Yahoo Finance:

    “Sustainability data is currently not available for WE.”

  32. random guy 62 says:

    So now we get to watch in amazement for another year or two while they make futile attempts to “reorganize”.

    Can’t a judge just spare humanity all the wasted effort and put this turd straight into liquidation, like… tomorrow maybe?

  33. HR01 says:


  34. PoCk3T says:

    Similar story unfolding this week with Zeus Living, which can be summarized as the accommodation equivalent to WeWork.

    Landlords had it good so far as well, except maybe at the end now, since Zeus might not pay the last 2 month of payments they owe as part of the early termination clause in the contract.

  35. SK says:

    If I were Masayoshi San I would stay clear of the Saudi embassies and agents, and avoid any layovers in the Middle East, having squandered Saudi $$ to landlords in the US, Canada and China, and a billion dollar bonus to Adam Neumann. In an era of easy money, Masa San was the king of good times, but when the tide retreated, he was caught naked just like other VC’s. He lost a leg, but still has an ARM.

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