WeWork Assembles Team To Avoid Bankruptcy As NYSE Starts Delisting Process

WeWork exterior
Bisnow/Jon Banister

Hoping to avoid public bankruptcy proceedings, coworking giant WeWork is amassing a team of restructuring experts.

The company brought on real estate adviser Hilco Global and tapped consultant Alvarez & Marsal and law firm Kirkland & Ellis to help address the company's massive debts and future as a business without having to go to court, Bloomberg reports.

The news comes after WeWork cast "substantial doubt" on its ability to remain in business in a second-quarter earnings call earlier this month. The company reported that it posted a net loss of $397M, deeper than its first-quarter loss of $299M.

Meanwhile, the New York Stock Exchange suspended trading of WeWork's warrants because of "abnormally low" prices Wednesday, Reuters reported. The NYSE has initiated WeWork's delisting, which was warned about in April.

WeWork said its shares would continue to trade on the NYSE, according to Reuters. Shares were trading at about 13 cents Wednesday, well below the $1 threshold necessary to remain on the exchange. The company said last week it would execute a stock split to regain compliance.

Warrants give the holder the right to trade shares of a company at a certain price before they expire.

A key piece of the company's ability to keep its restructuring out of court will depend on whether it can renegotiate or exit leases in its most expensive markets, sources told Bloomberg. WeWork typically signed 25-year leases, pivoting to more flexible management agreements only around the time of its unsuccessful pre-pandemic initial public offering attempt.

Rent sucks up 74% of WeWork's revenues and accounts for two-thirds of its operating expenses, executives said on the company's latest earnings call.

“We will continue to invest in our product offerings while simultaneously taking necessary steps to reduce rent and tenancy costs,” a WeWork representative told Bloomberg in a statement. “Our members remain our priority and, regardless of any near term actions we may take, we will continue to operate and serve them for the long term.”

Kirkland & Ellis and Hilco Global are both working with Regal Cinemas parent Cineworld Group PLC in its Chapter 11 bankruptcy process. WeWork also added four experts in bankruptcy and corporate restructuring to its board this month following the resignation of three members.

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